This study addresses the question of whether directors of publicly listed companies engage in self‐serving behaviour. Specifically, the enquiry considers whether directors in failing firms reduce personal shareholdings in their firms as failure approaches. The answer not only has implications for shareholders and regulators but has importance in terms of agency theory. While it appears that directors of failed firms do not hold fewer shares or reduce their shareholdings in their own firms, it seems that they do not increase their shareholdings as frequently as those in non‐failed fi