Data selection and sample descriptives

Abstract

The objective of this study is to analyze how firms encounter and respond to financial distress. My sampling procedure follows a two-step approach in which I (1) create a stratified sample of firms that fulfill a specified distress-criterion and (2) track each firm’s development over the distress interval. Thus, my data set is dynamic following the cycle of distress from its onset to its resolution. I collect data on financial accounts, ownership and board composition, and restructuring activity. My sampling period covers the years 1996–2004 and begins by identifying all publicly traded German corporations with stock price and basic financial statement data available on the German tapes of DATASTREAM and WORLDSCOPE, respectively.¹ The choice of the sample period results from data availability constraints: Mandatory ad-hoc publication of corporate news (such as restructuring-measures) are systematically obtainable from 1996 forward and 2003 was the last year for which financial statements were available when the sample was collected

Collection of financial statements ended 2003. However, I tracked corporate restructuring activities until the end of 2004.