It's a matter of time! CEO turnover and corporate turnarounds in Italy

Abstract

This paper examines whether CEO turnover affects company performance and the optimal time for CEO renewal during a turnaround process. Results, derived from data collected from Italian companies, highlight the necessity of introducing the new CEO before beginning an insolvency procedure. A later appointment can reduce his/her impact, probably due to the difficulty of managing negotiations with the creditors. Moreover, we show a positive and significant relationship between CEO turnover and the likelihood of a bankrupt firm re-emerging from an insolvency procedure. The analysis was based on the traditional logit model and more modern approaches like the random forest and the AdaBoost models, combined with the SHAP technique. Overall, our findings provide valuable insight for all company stakeholders, whose interests are significantly impacted by its default.

The efficiency of preventive restructuring procedures: Evidence from France

“…The importance of early restructuring as a means of maximizing creditor value and minimizing economic cost is recognized by many scholars and institutions (Dallocchio, Caputo, et al, 2022). Garrido (2012) argues that early debt restructuring is key to maximizing value for creditors and minimizing costs to the economy, especially for conflicts in family firms (Caputo et al, 2018).…”

fANOVA taikymas kompanijų su dažnu ir retu generalinio direktoriaus pasikeitimu palyginimui

“…In addition, Khurana and Nohria [13] found significant positive effects on profitability when CEO change is non-voluntary and a person outside of the company is chosen as a replacement. Furthermore, it was shown that for companies in liquidation, the CEO change can have a positive impact and save the company from being declared bankrupt [4]. Considering the stock prices, Mandagi [15] claimed that the market reaction is positive, only if the CEO resigns voluntarily.…”