國立臺灣大學財務金融學系Lee, Tsun-SiouTsun-SiouLeeYeh, Yin-HuaYin-HuaYeh2006-09-272018-07-092006-09-272018-07-092002-05-02http://ntur.lib.ntu.edu.tw//handle/246246/20060927122731523921Prior empirical evidence supports the wealth expropriation hypothesis that the controlling shareholder(s) tend to expropriate minority interests, which in turn reduces corporate value. However, it is still unclear whether corporate financial distress is related to this type of expropriative behavior. To answer this question, we adopt three variables to proxy for the risk of expropriation by the controlling shareholder, namely, the percentage of directors occupied by the controlling shareholder, the percentage the controlling shareholders shareholding pledged for bank loans （pledge ratio ）, and the deviation of control away from cash follow rights. Binary logistic regressions are then fitted to generate dichotomous prediction models. Taiwanese listed firms, characterized by a high degree of ownership concentration similar to that in most countries, are used as our empirical samples. The evidence suggests that the three variables mentioned above are positively related to the risk of financial distress, even after controlling for the possible influence of financial performance. It is also found that corporate governance deteriorates a year before the financial distress occurs. Generally speaking, firms with weak corporate governance are vulnerable to economic downturns and the probability of falling into financial distress increases when corporate governance deteriorates. An immediate implication follows that any early warning system cannot be complete without incorporating corporate governance variables.application/pdf99237 bytesapplication/pdfzh-TWreporthttp://ntur.lib.ntu.edu.tw/bitstream/246246/20060927122731523921/1/7-3.pdf