Relationship Between Leadership and Bankruptcy (Essay Sample)

Analyze the Possible Relationship between Leadership and Bankruptcy
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Bankruptcy denotes the impactful event that no company wants to experience. Bankruptcy occurs when a corporate is incapable of fulfilling its obligations and applies for some time of relief to liquidate its assets or reorganize its debts to the federal court. Bankruptcies have negative consequences for companies. In any case of bankruptcies, shareholders lose their share value, and bondholders attain a small share of their investment. There is cutting off of employees’ health benefits plus other benefits. Additionally, bankruptcies lead to jobs cut too. The essay aims to investigate and to outline the possible relationship between leadership and bankruptcy.
Leadership captures the basics of being capable and prepared to encourage others. Effective leadership is founded on ideas, both borrowed and original, that is effectively channeled to others in a mode that engages them sufficiently to act like the leader aspires them to act. Poor strategic leadership is seen as a factor in 75 percent of failed firms. The excessive ego in a leader often leads to poor strategic leadership that is normally the root of a firm’s financial difficulties (Appiah, & Chizema, 2016). The absentee leadership or personal presence-absence leads to insufficient awareness and management of the firm. Strategic indecision and mistakes could lead to issues not getting resolved, toppling firms.
Leadership focuses on the connection between stockholders, boards, auditors, top management, regulators, and other stakeholders. Poor leadership manipulates financial data that masks bad performance. That was evident in the case of WorldCom and Enron. Additionally, a company’s governance structure illustrates the nexus of incentive contracts. The management’s efficacy to respond to distress is dependent on the characteristic of the company’s governance structure (Politis, 2015). Companies with poor leadership are less capable of making an essential adjustment to avert bankruptcy. Blindness, pride, over-optimism, and arrogance to realities are part of the characteristics of a leader who grows misperception regarding the firm’s capability and market.
In conclusion, a leader’s characteristics have s