Management-to-staff ratio and a firm's exit

We investigate the predictive ability of the management-to-staff ratio for the arbitration between liquidation and voluntary dissolution. Using a sample of 697 French firms covering the period from 2011 to 2017, our hazard model shows that firms with more managerial staff tend to have a lower probability of exiting through liquidation rather than through voluntary dissolution. Compared to liquidation, voluntary dissolution not only provides the opportunity to organize the liquidation of a firm's remaining assets, but it also better preserves managers' reputation.