Financial Distress and Managerial Turnover: The Case of the Republic of Serbia

This study examines the influence of financial distress on top management turnover in the Republic of Serbia over the period January 2009-June 2015. Using a sample of 86 large and medium-sized privately owned companies that adopted a reorganisation plan in bankruptcy, we found out that top management was changed in 33 companies. A logistic regression provides evidence that probability of top management turnover is significantly correlated with the company's size (positive correlation) and the ownership concentration (negative correlation). The influence of the company's financial performance, applied bankruptcy proceedings and debt monitoring of top management turnover was deemed to be statistically insignificant (at 5% and 10% significance level). Obtained results provide the proof that corporate governance mechanisms in distressed Serbian companies are not efficient.