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CEO and director turnover in failing firms: An illusion of change?
Author(s) -
Daily Catherine M.,
Dalton Dan R.
Publication year - 1995
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250160505
Subject(s) - business , illusion , industrial organization , management , business administration , economics , psychology , cognitive psychology
Firms facing imminent bankruptcy would seemingly be under some pressure to demonstrate effective governance structures as a means for maintaining the support of important external constituents and initiating a turnaround. Little is known, however, about CEO and director turnover and its impact on the composition and structure of the board in failing firms. This study assesses both the incidence and form of governance changes in the 5‐year period prior to corporate bankruptcy. Despite extensive board member and CEO replacements. changes by firms at imminent risk of failure do not conform with the prescriptions favored by reform advocates and institutional investors.