Corporate strategy and shareholder value during decline and turnaround
Abstract
Purpose
The paper aims to assess the impact of corporate strategy on shareholder value in decline and turnaround situations.
Design/methodology/approach
A sample of 45 turnaround firms was selected and matched against a control sample which did not face continuous decline over the time period studied. The impact of corporate strategy on shareholder value was tested using cumulative beta excess return measures to capture the long‐term basis of corporate strategy.
Findings
The paper finds that the beta excess return measures captured the hypothesized relationships between strategy and shareholder value for the sample firms studied.
Practical implications
Beta excess return measures are superior to case studies or event studies for identifying the long‐term effects of corporate strategy.
Originality/value
Relatively few studies have compared the strategies of turnaround firms with a matched sample of non‐declining firms. The use of cumulative beta excess returns to assess long‐term valuation of corporate strategy is original.
Keywords
Citation
Furrer, O., Rajendran Pandian, J. and Thomas, H. (2007), "Corporate strategy and shareholder value during decline and turnaround", Management Decision, Vol. 45 No. 3, pp. 372-392. https://doi.org/10.1108/00251740710745025
Publisher
:Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited