Does CEO power matter for the performance of retrenchment strategy?

You, Hui Wei; Kontesa, Maria

doi:10.1108/jsma-10-2019-0186

Cited by 12 publications

(16 citation statements)

References 65 publications

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“…No matter how powerful or how weak the CEO is, it has an indifferent performance. The CEO's legitimate authority in serving any strategic decision, structure and process will not induce any changes in performance, confirming previous studies such as Boyd (1995), Han et al (2016), Brahmana et al (2020).…”

Section: Ceo Powersupporting

confidence: 85%

Divestiture strategy, CEO power and firm performance

You

Yong

2020

MRR

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Purpose This study aims to examine the moderating role of chief executive officer (CEO) power on the relationship between divestiture strategy and firm performance by framing the relationship under the agency and power circulation theories. Design/methodology/approach This study focuses on a sample of 319 non-financial public-listed companies in Malaysia from the year 2012–2016 and estimates the model under two-step generalized method of moments panel regression to eliminate the endogeneity issue. Findings The results show that divestiture strategy decreased the firm performance. Meanwhile, greater CEO power changed that divestiture effect but still failed to increase the performance. This study also indicates the CEO power strengthens the relationship between firm performance and divestiture. Research limitations/implications The overall findings show that the positive moderating role of CEO power on the relationship between divestiture and performance. This research confirmed the agency and power circulation theories by showing that CEO power can make divestiture strategy works. However, the moderating plot tells different. CEO power may strengthen the relationship between divestiture and performance; it fails to boost up the performance in overall. Therefore, this study is about CEO power on the strategic decision and gives a good implication for corporate governance concerning the impact of CEO power on the organization’s alignment process. Originality/value This study examines the effect of CEO power on the performance of divestiture strategy implementation by contesting the agency and power circulation theories within an emerging country context.

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Section: Ceo Powersupporting

confidence: 85%

Divestiture strategy, CEO power and firm performance

You

Yong

2020

MRR

Self Cite

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“…The executives have control over the company and affect its decision-making, leading to influences of the company's performance. Brahmana et al (2020) believe that greater CEO power changes that retrenchment effect into increased performance. Khani et al (2019) claim that the When the CEO gets enough power, the board of directors is unlikely to participate in the decision-making of the company's strategy.…”

Section: Literature Review Of Executive Powermentioning

confidence: 99%

The Impact of Overseas M&A on Performance Sensitivity of CEO Turnover: Evidence From Chinese Listed Companies

Sun¹,

Zheng²,

Li³

et al. 2022

RWE

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In recent years, with China’s growing economic strength driven by the reform of market economic system and the implementation of “going out” strategy, overseas M&A has become an important channel for many Chinese listed companies to optimize the resource allocation and realize the leap of global value chain. Overseas M&A not only garners the advanced technology from overseas companies, but also improves the corporate governance of the parent company. With the data of Chinese listed companies from 2003 to 2019, this paper empirically examines how overseas M&A of listed companies influences the performance sensitivity of CEO turnover, and the PSM method and placebo tests are adopted to discuss the endogeneity. Finally, we proceed the heterogeneity tests by the nature of property rights, CEO power and the market competitiveness of product, respectively. The empirical results show that overseas M&A of Chinese listed companies will significantly improve the performance sensitivity of CEO turnover, and the phenomenon is more significant in SOEs and companies with lower management shareholding ratio, older CEO age, longer tenure of CEO, and lower product market competition. The conclusion of this paper not only offers a unique theoretical perspective for China's listed companies to improve their governance efficiency through overseas M&A, but also provides policy references for improving China's overseas M&A behavior in practice.

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“…Several previous studies have demonstrated that CEO power plays a role in moderating the relationship between the CEO's hubris behavior and firm performance associated with its antecedent factors. Brahmana et al (2021) explain that the moderating impact of CEO power occurs when it interacts with antecedent firm performance, namely the retrenchment strategy. Empirical evidence from 319 Malaysian companies was found that a retrenchment strategy would improve company performance when CEO power is high.…”

Section: Literature Reviewmentioning

confidence: 99%

CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

Zulfikar

Nursiam

Mujiyati

et al. 2021

Problems and Perspectives in Management

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The purpose of the study is to thoroughly outline how the hubris behavior of chief executive officers (CEO) is detrimental to Islamic banks’ (IBs) performance. Specifically, this study attempts to examine the role of the Sharia supervisory board (SSB), board vigilance, and CEO power in the relationship between CEO hubris behavior and decreased IBs’ performance. This study observes IBs’ performance during the period from 2014 to 2020 and develops eight models to test their determinants. Empirical testing of all models shows that CEO hubris has a detrimental impact on IBs’ performance. The moderating impact test shows the following results: firstly, the presence of SSB, which is represented by the reputation of its members, reduces the detrimental impact of hubris behavior by CEOs on IBs’ performance, while that impact, which is represented by member expertise, does not have a moderating effect. Second, the size and independence of the BOC both weaken the negative relationship between CEO hubris and IBs’ performance. Third, CEO power as represented by tenure and ownership has no moderating effect.

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Does CEO power matter for the performance of retrenchment strategy?

Cited by 12 publications

References 65 publications

Divestiture strategy, CEO power and firm performance

Divestiture strategy, CEO power and firm performance

The Impact of Overseas M&A on Performance Sensitivity of CEO Turnover: Evidence From Chinese Listed Companies

CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

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