Title: Turnaround in hectic times: the influence of CEO attributes under different market conditions

Authors: Lars Schweizer; Andreas Nienhaus

Addresses: Chair of Strategic Management, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 4, D-60629 Frankfurt am Main, Germany ' Chair of Strategic Management, Goethe-University Frankfurt, Theodor-W.-Adorno-Platz 4, D-60629 Frankfurt am Main, Germany

Abstract: Dismissing the CEO is a common turnaround move when coping with financial distress. However, the beneficial effect on firm survival remains largely unproven. By applying the fit/misfit logic of Chen and Hambrick (2012) for executives in distressed firms, we show that a manager's personal attributes (in our study CEO-founder-duality and CEO-chairman-duality) have a greater influence on turnaround than firing the CEO per se. By developing a split sample of different contextual settings, the influence of CEO attributes on survival success in company inherent crises is compared to the influence in exogenously induced market shocks. Results based on 168 distressed firms demonstrate the impact of CEO and firm characteristics on turnaround success. We find that during exogenously induced distress, CEO-founder-duality is negatively related to firm survival. However, company size and market expectations increase turnaround chances. In contrast, in company inherent crises, CEO-chairman-duality is positively related to survival. Our findings contribute to the field of corporate turnaround research by extending the fit/ misfit theory to executives with function duality and accounting for severe market changes.

Keywords: turnaround; financial distress; founder-CEO; CEO-function-duality; CEO dismissal; fit/misfit theory.

DOI: 10.1504/IJMD.2022.122824

International Journal of Management Development, 2022 Vol.2 No.2, pp.102 - 134

Received: 10 Dec 2019
Accepted: 11 Sep 2020
Published online: 13 May 2022 *

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