Business administrative systems and post-bankruptcy financial distress

Extant literature considers Business Administrative Systems (BAS) as a set of tools, methods and structures that support management in the continuum of decision-making, monitoring and reporting. In this paper we analyze the role of BAS in a context of companies in financial distress, with the assumption that the characteristics of the BAS help to explain the effects of business failure. In order to study the relationships between BAS and the severity of failure, we used a total number of 668 questionnaires collected in 2011 by the Observatory on Corporate Crisis (OCI) that contains the profiles of governance and management of bankrupt companies, as well as the causes and circumstances of the distress. The research results show that firms with more advanced BAS tend to be more durable and mitigate the economic and financial consequences of failure, reducing the level of debt and capital deficit in proportion to the capital invested. The effects of most advanced BAS are both direct and indirect as increase the propensity to start a turnaround process and the restructuring of the company’s debt situation. This paper is structured as follows: section 1 describes the primary perspective of the Business Administrative Systems in management studies; section 2 proposes an integrated framework aimed at integrating the reorganization strategies and performing information systems as a relevant tool in strategic management decision-making processes for companies in distress; sections 3, 4 and 5 describes the research design, the methodology followed and the results; finally sections 6 summarizes the main decisions of the paper, recognizes the study’s limitations and provides implications and ideas for a future research.

Key-Words: Crisi e risanamento d’impresa

Figure 1. Enabling factors of the processes of strategic and operative turnaround

Figure 2. Antecedents and consequences of the business administrative system

Figure 3. Main results of Restructuring strategies, Business administration systems and severity of failure (PPC)

Figure 4. Main results of restructuring strategies, administration and control systems and durability

Table 1. Turnaround initiatives within the preceding five years

Table 2. Organizational models of the CFO function

Table 3. Complexity of the work done by the CFO function

Table 4. Tools of management and control

Table 5. Variable Description.

Table 6. Latent Variables Composition

Table 8. Model H1 – PPC

Table 9. Model H2 – Durability