Insolvency Timing and Managerial Decision-Making

Frederik Drescher addresses the timing of non-mandatory insolvency filings based on threatening illiquidity ( 18 InsO) with the aim of a companys restructuring as an agency problem between owners and management. Using a decision model, the author develops the hypothesis of a tendency towards delayed insolvency filings and confirms it experimentally. Moreover, he analyzes different incentive instruments potentially leading to earlier insolvency filings.