Financial Strategies for Distressed Companies: A Critical Analysis and Operational Tools (Contributions to Finance and Accounting)

The financial markets have undergone a significant development process, both qualitatively and quantitatively, and partly induced by major pushes for globalization and deregulation. In this context, finance has taken on an increasingly central role for companies and is now on par with production and sales, which have always been the cornerstones of business management. The effects of these structural and functional changes are not limited to the way companies operate, but also imply a change in corporate cultures; one consequence of this phenomenon is the large percentage of managers from the world of finance at the top tiers of corporate organizations. Moreover, environmental turbulence has forced companies to increasingly face negative situations characterized by economic and financial imbalances that may require far-reaching strategic changes. The purpose of this book, therefore, is to investigate the possible financial strategies that companies in distress can adopt; in this regard, it approaches financial strategies as opportunities to resolve and prevent difficult situations for the company. After having systematized the financial strategies and policies used in the governance of companies, the book analyzes both crises and turnaround processes, describing the path until the financial balance is restored. Finally, the authors analyze essential tools for the financial management of companies in trouble, focusing in particular on operational tools for managing the crisis, the recovery plan, and its monitoring. Preface Contents Chapter 1: Introduction Chapter 2: Financial Strategies and the Role of Corporate Governance in Complexity 2.1 The Strategic Role of Governance in Environmental Complexity 2.2 Strategic Management and Operational Management: Corporate Governance 2.3 The System of Corporate Strategies in Conditions of Uncertainty: Positioning of the Firm in the Economic-Social System 2.4 The System of Corporate Strategies in Conditions of Uncertainty: The Firm ́s Structural Strategic Framework 2.5 The Evolution of Finance in Strategic Corporate Management 2.6 Competitive Economic-Financial Strategies References Chapter 3: The Role of Financial Strategy in Firms: Financing and Investment Decisions 3.1 Change Management and Financial Strategy: Introductory Elements 3.2 Investment Decisions Among Uncertainty and Risk: The Role of Financial Strategy 3.3 Objective and Subjective Constraints of Financial Strategy 3.4 Selection of Sources of Financing 3.4.1 Cost of Financing Sources 3.4.2 Composition of Investments, Financing and Their Correlation 3.4.3 Level of Financial Elasticity 3.4.4 Financial Leverage 3.5 Main Methodologies of Investment Evaluation 3.5.1 Sensitivity Analysis 3.5.2 Break-Even Point Analysis 3.5.3 Monte Carlo Simulation Method 3.5.4 Decision Tree 3.6 Financial Risk Management 3.7 Derivative Financial Instruments 3.8 Main Models of Measuring Exposure to Financial Risks References Chapter 4: Corporate Crises and Strategic Recovery 4.1 The Different Paths of Decline: What Are the Economic-Financial Consequences? 4.2 Causes of the Crisis and the Identification Process 4.3 The Strategic Recovery 4.4 The Management of Complexity and Competitive Reorganization 4.5 Financial Recovery and Recovery Opportunities References Chapter 5: The Recovery Plan as a Strategic-Informative Tool Between Needs and Opportunities 5.1 Scope of Reference: The Recovery Plan 5.2 The Recovery Plan Between Stakeholder Theory and Asymmetric Information 5.3 General Principles for Preparing the Recovery Plan 5.3.1 General Principles on Methods and Techniques Used 5.3.2 General Principles on Contents 5.3.3 General Principles on Form 5.4 The Recovery Plan References Chapter 6: Conclusions