Strategic turnaround: unraveling the impact of CEO power on firm performance during retrenchment
Abstract
Purpose
This paper aims to investigate the impact of retrenchment strategy on firm performance in the context of Pakistani firms while considering the moderating role of chief executive officer (CEO) power. By examining the influence of CEO duality and CEO share ownership on the relationship, this study contributes to strategic management and corporate governance knowledge within the Pakistani business environment.
Design/methodology/approach
A quantitative approach was used to analyze the relationship using data from annual financial statements. The sample consisted of 76 companies from the KSE-100 index from the year 2015 to 2020. Random effects regression models were used, along with hierarchical regression to explore the moderating effect of CEO power.
Findings
The findings demonstrate that the implementation of a retrenchment strategy positively impacts firm performance in Pakistani firms. The study also reveals that CEO power plays a crucial role in strengthening the relationship between retrenchment strategy and firm performance. Moreover, the study highlights the importance of considering the temporal sequence, size and age of firms when examining the impact of CEO power and retrenchment strategy on firm performance.
Research limitations/implications
The study enhances the understanding of the contingent nature of retrenchment strategies and the influence of CEO power in the Pakistani business context. Practically, the research contributes to strategic management and corporate governance dynamics, facilitating the development of strategies that enhance firm performance and sustainability in Pakistan.
Originality/value
This research provides original insights by specifically focusing on the Pakistani context and analyzing the interplay between retrenchment strategy, CEO power and firm performance. The study adds to the limited literature on the relationship between retrenchment and performance in the Pakistani business environment. Additionally, it highlights the significance of CEO power as a critical factor in determining the success of retrenchment.
Keywords
Acknowledgements
Funding: This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Declaration: This research paper affirms that no artificial intelligence tools were used throughout the study. The analysis and findings presented in this research solely rely on traditional research methodologies, data collection and analysis techniques.
Conflict of interest: The authors declare no conflict of interest.
Citation
Ijaz, M., Sadiq, N. and Abbas, S.F. (2024), "Strategic turnaround: unraveling the impact of CEO power on firm performance during retrenchment", International Journal of Law and Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJLMA-01-2024-0010
Publisher
:Emerald Publishing Limited
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