Report on An Empirical Evidence from Sweden & Denmark

The main purpose of this degree project is to identify the possible relationship between board composition and the probability of FD among listed companies in Sweden and Denmark. Sweden and Denmark were chosen due to the authors’ interest in the Scandinavian region.


The main focus of this paper is to examine board composition characterized by board independence, board size, board ownership, COB ownership and CEO duality. As a measure of the probability of FD, we have chosen the Altman’s Z-score models. Z-score will be calculated based on one-year financial data since we believe it will provide higher precision because it was proven to have 95 % of accuracy, one year prior to the failure (Bellovary, 2007, pp. 2-4).

The results of this study are aimed to fill in the gap and represent up-to-date information about board composition and how its characteristics could be related to FD probability of listed companies in the Swedish and Danish markets. We will develop first a database, containing our sample formed of segments with Distressed and Healthy companies and then build a database, containing information of board composition in these companies.

The main contribution of this study is that it will be conducted in the Swedish and Danish markets. In addition, we would like to cover manufacturing and nonmanufacturing companies in those countries, and we assume that the segment size will be big enough to make certain conclusions and define certain trends. However, we understand that the size of the countries might influence the number of companies that we will end up with. Moreover, we did not find any database providing data for the characteristics of a board for listed companies in these regions, therefore we will build our database, based on the sample of financially Distressed and Healthy companies measured with the help of Altman’s Z-score models.

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Since we are going to do a degree project, which covers areas like corporate governance, finance, and accounting, we would like to state that this thesis is mainly addressed to students, who study business, economics, management, finance, and accounting. Managers, directors, auditors, shareholders, and investors also might find this paper interesting because the connection of probability of FD and board composition is tested in Swedish and Danish markets. We believe this study might provide additional knowledge to investors, shareholders and directors themselves when making decisions. Investors and shareholders will take into consideration not only the profit and revenue generated by a company but also take a look at the board composition, which plays a vital role in a company’s performance. In addition, it will be a good contribution into this area of research, since researchers can use our database for further studies in this area.

The main limitation of this study is that we have taken only two countries, which are parts of the Scandinavian region. We believe further investigation in the rest of Scandinavian countries is possible.




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