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Corporate strategy and shareholder value during decline and turnaround

Olivier Furrer (Nijmegen School of Management, Radboud University, Nijmegen, The Netherlands)
J. Rajendran Pandian (Department of Management, University of Wollongong, Wollongong, Australia)
Howard Thomas (Warwick Business School, University of Warwick, Coventry, UK)

Management Decision

ISSN: 0025-1747

Article publication date: 10 April 2007




The paper aims to assess the impact of corporate strategy on shareholder value in decline and turnaround situations.


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.


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.


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.



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.



Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

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