The Impact of Agency Problems and National Frameworks on Corporate Restructuring and Failure: A Comparative Case Study in the Airline Industry

Abstract

The purpose of this thesis is to investigate the role of agency theory and national frameworks in corporate restructuring and corporate failure. To do so, the principal agent model is applied to a case of corporate failure in the airline industry and compared to a similar case with a different outcome in different country settings. What is found is that agency conflicts and national differences have influence in restructuring decisions and processes. The work foresees the following. First, a literature review on corporate restructuring, national regulatory frameworks, and airline crisis and failure is performed in order to gain the main insights on the most recent relevant literature on the main topics. Then, an analysis of the main theories on corporate governance, stakeholder theory and agency theory allows for better understanding of the theoretical framework. Subsequently, the theory is applied in an analysis of Italian carrier Alitalia case as compared to the case of insolvency and failure in German airline Air Berlin to investigate how corporate restructuring and corporate failure fit in the principal-agent model. In order to investigate the cases and their outcomes with causes imputable to cross-country differences, an analysis of national regulatory frameworks and business culture differences is conducted, with an emphasis on corporate governance and institutional environment. Finally, conclusions and managerial implications are drawn with possibilities for future research.