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Corporate distress and turnaround: integrating the literature and directing future research

Published on Jun 1, 2017in Business Research
· DOI :10.1007/s40685-016-0041-8
Lars Schweizer9
Estimated H-index: 9
(Goethe University Frankfurt),
Andreas Nienhaus1
Estimated H-index: 1
(Goethe University Frankfurt)
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Abstract
Abstract The topic of corporate distress and turnaround has been of interest to organizational change theory for many decades. This article considers existing reviews in discussing the current body of turnaround literature across multiple research fields and structures its work along a holistic framework. The numerous facets of corporate turnaround, resorting to general corporate restructuring research classifications, are clustered in a more detailed manner than those that merely rely on two commonly employed turnaround dimensions: “retrenchment” and “recovery.” The authors develop an agenda for future research based on this cross-disciplinary literature aggregation by highlighting current gaps and offering potential research questions. The review contributes to the understanding of corporate distress and turnaround by integrating different research streams. Additionally, the work emphasizes the need for further harmonization and operationalization in turnaround success metrics.
  • References (257)
  • Citations (5)
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References257
Newest
Published on Nov 1, 2013in Strategic Management Journal5.57
Brian Wu7
Estimated H-index: 7
(UM: University of Michigan)
This paper examines how demand conditions across alternative markets impact diversification decisions and firm performance by influencing the opportunity costs of deploying non-scale free capabilities. Using data within the cardiovascular medical device industry, this study shows that: (1) firms with a larger stock of pre-entry innovation experience are more likely to diversify; (2) firms in a current market with greater relative demand maturity are more likely to diversify; (3) diversification ...
Published on Nov 1, 2013in Journal of Management9.06
Patricia M. Norman10
Estimated H-index: 10
(Baylor University),
Frank C. Butler6
Estimated H-index: 6
(UTC: University of Tennessee at Chattanooga),
Annette L. Ranft18
Estimated H-index: 18
(UT: University of Tennessee)
Downsizing is a common business management practice. Prior research has examined the financial consequences of downsizing or the impact on individuals remaining in a downsizing organization. Taking a resource-based perspective, this study integrates and extends prior research on downsizing by examining how downsizing influences the relative likelihood that a firm will experience one of three states in the three years following downsizing. Multinomial logistic regression is employed to test hypot...
Published on Oct 1, 2013in Review of Financial Studies4.97
Karl V. Lins21
Estimated H-index: 21
(UofU: University of Utah),
Paolo F. Volpin23
Estimated H-index: 23
,
Hannes F. Wagner8
Estimated H-index: 8
We study whether and how family control affects valuation and corporate decisions during the 2008--2009 financial crisis using a sample of more than 8,500 firms from 35 countries. We find that family-controlled firms underperform significantly, they cut investment more relative to other firms, and these investment cuts are associated with greater underperformance. Further, we find that within family groups liquidity shocks are passed on through investment cuts across the group. Our evidence is c...
Published on Sep 1, 2013in Journal of Management Studies5.84
Achim Schmitt7
Estimated H-index: 7
(École hôtelière de Lausanne),
Sebastian Raisch14
Estimated H-index: 14
(University of Geneva)
Corporate turnaround research has described retrenchment and recovery as contradictory forces that should be addressed separately. While a few scholars have argued that retrenchment and recovery are interrelated and may have to be integrated, others have contended that such arguments are flawed since they downplay the contradictions between the two activities. In this paper, we clarify the nature of the retrenchment–recovery interrelations, as well as their importance for turnaround performance....
Published on Sep 1, 2013in Strategic Management Journal5.57
Hermann Achidi Ndofor10
Estimated H-index: 10
(A&M: Texas A&M University),
Jeff Vanevenhoven7
Estimated H-index: 7
(University of Wisconsin–Whitewater),
Vincent L. Barker18
Estimated H-index: 18
(A&M: Texas A&M University)
Investigations into management actions that reverse organizational decline have produced inconsistent findings. Prior studies have focused on the value of retrenchment actions versus strategic actions to engineer a performance turnaround. These studies, however, have generally not controlled for the cause of firm decline, overlooking a major theoretical contingency. Examining prepackaged software firms in the 1990s, we test the association of strategic and retrenchment actions in facilitating tu...
Published on Jul 1, 2013in Journal of Management9.06
Cheryl A. Trahms2
Estimated H-index: 2
(A&M: Texas A&M University),
Hermann Achidi Ndofor10
Estimated H-index: 10
(A&M: Texas A&M University),
David G. Sirmon24
Estimated H-index: 24
(UW: University of Washington)
In the 20 years since the last review on organizational decline and turnaround, the scope of turnaround research has expanded dramatically; however, research on this phenomenon remains empirically and theoretically fragmented. Recent research has incorporated managerial cognition, strategic leadership, and stakeholder management and has identified simultaneous and complex resource-based actions beyond the two-stage model developed in the last review by Pearce and Robbins two decades ago. Thus, h...
Published on Apr 1, 2013in International Journal of Management Reviews7.60
Charles A. Scherbaum14
Estimated H-index: 14
(CUNY: City University of New York),
Adam W. Meade24
Estimated H-index: 24
(NCSU: North Carolina State University)
Despite its importance, measurement has received less attention in the management sciences than it deserves. Currently, there is an over‐reliance on a narrow set of methods of measuring cognitive, affective, motivational, attitudinal and individual difference constructs that are often of interest in behavioural management research. The authors argue that there is a need to expand the scope of the measurement methods commonly employed by management researchers and that a greater diversity of meas...
Published on Mar 1, 2013in Review of Financial Studies4.97
Nicola Gennaioli26
Estimated H-index: 26
(Bocconi University),
Stefano Rossi12
Estimated H-index: 12
(Purdue University)
In a financial contracting model, we study the optimal debt structure to resolve financial distress. We show that a debt structure where two distinct debt classes co-exist - one class fully concentrated and with control rights upon default, the other dispersed and without control rights - removes the controlling creditor's liquidation bias when investor protection is strong. These results rationalize the use and the performance of floating charge financing, debt financing where the controlling c...
Published on Mar 1, 2013in Journal of Management9.06
Julie I. Hancock5
Estimated H-index: 5
,
David G. Allen28
Estimated H-index: 28
(U of M: University of Memphis)
+ 2 AuthorsCharles A. Pierce30
Estimated H-index: 30
(U of M: University of Memphis)
Previous research has primarily revealed a negative relationship between collective employee turnover and organizational performance. However, this research also suggests underlying complexity in the relationship. To clarify the nature of this relationship, the authors conduct a meta-analytic review in which they test and provide support for a portion of Hausknecht and Trevor’s model of collective turnover. The authors’ meta-analysis includes 48 independent samples reporting 157 effect size esti...
Published on Jan 1, 2013in Journal of Financial Economics4.69
Yuanzhi Li1
Estimated H-index: 1
(TU: Temple University)
Past literature has assumed that negative stock returns around Chapter 11 filing are solely due to new adverse information about firm value. This paper argues that there is also a nonlinear wealth transfer from shareholders to creditors causing shareholder loss. The magnitude of the wealth transfer can be quantified in a setting where equity is a call option on firm assets as in the Merton (1974) model. The wealth transfer originates from maturity shortening of the call option as a result of Cha...
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Published on Jun 26, 2019in International Journal of Auditing
Ahsan Habib27
Estimated H-index: 27
(Massey University),
Julia Wu (Cant.: University of Canterbury)+ 1 AuthorsXuan Sean Sun (Massey University)
Published on Jan 1, 2019in International Review of Financial Analysis1.69
Ahsan Habib27
Estimated H-index: 27
(Massey University),
Mostafa Monzur Hasan7
Estimated H-index: 7
(Curtin University)
Corporate life cycle has received considerable interest in the accounting, finance and corporate governance literature. We synthesize this literature to inform readers about the valuable insights gained from these studies, and to outline knowledge gaps and future research directions. Although papers studying the determinants of corporate life cycles are few in number, our review suggests that managerial efficiencies, flexibility, and the resource-base of the firm drive the transition through the...
Published on Jan 1, 2019in Long Range Planning3.36
Hanna Maria Sievinen (Lappeenranta University of Technology), Tuuli Ikäheimonen1
Estimated H-index: 1
(Lappeenranta University of Technology),
Timo Pihkala6
Estimated H-index: 6
(Lappeenranta University of Technology)
Abstract In spite of the high failure rates of later-generation family companies, the research on family firm strategic renewals has been limited. The role of the owners in these situations, in particular, remains underexplored. We address this research gap and suggest that the owners of a family firm can take an active resource role in triggering and supporting change, and by balancing the disruption through bridging the firm's new direction with the past. We propose a framework that illustrate...
Published on Oct 21, 2018in Australian Accounting Review1.44
Larelle June Chapple11
Estimated H-index: 11
(QUT: Queensland University of Technology),
James Routledge6
Estimated H-index: 6
(Hitotsubashi University)
Published on Sep 12, 2018in Accounting and Finance1.48
Ahsan Habib27
Estimated H-index: 27
(Massey University),
Mabel D' Costa (Massey University)+ 2 AuthorsLi Sun (Massey University)
Published on Jan 1, 2018
Benoit Mario Papillon1
Estimated H-index: 1
(Université du Québec à Trois-Rivières),
Martin Morin3
Estimated H-index: 3
(Université du Québec à Trois-Rivières)
Les reorganisations d’entreprises sont devenues un phenomene assez courant. Une reorganisation suspend le droit des creanciers et prolonge le mandat des dirigeants. Elle entraine en outre une reduction des dettes non prioritaires de l’entreprise dans une proportion de 90 % ou plus. Ces dettes representent la principale source de financement externe pour bon nombre de PME. La loi sur la faillite et l’insolvabilite est l’une des deux principales lois canadiennes permettant les reorganisations. Ell...
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