Financial Distress and Firm Value Across the Life Cycle: A Systematic Review

In today’s dynamic global economy, financial distress and corporate restructuring have emerged as pivotal concerns for firms, stakeholders, and regulatory bodies. Financial distress, defined as a company’s inability to meet its financial obligations, poses significant risks to shareholders, creditors, and other stakeholders. In contrast, corporate restructuring serves as a strategic mechanism to enhance organizational performance and preserve long-term firm value. This study presents a systematic literature review that investigates the interrelationships among financial distress, corporate restructuring, the corporate life cycle, and firm value. By drawing on relevant financial theories—particularly firm value theory and the corporate life cycle model—this review elucidates how firms navigate financial challenges across different life cycle stages. Internal factors such as capital structure and operational efficiency, alongside external influences including market dynamics and regulatory environments, are considered in assessing firm value. The systematic literature review (SLR) method is employed to synthesize existing research, identify recurring themes and methodological patterns, and expose gaps in the literature. The findings provide valuable insights for academics and practitioners, offering a theoretical and practical framework to support decision-making in managing financial distress and optimizing firm value in varying economic contexts.