The different impact of top executives' turnover on healthy and restructured companies

Purpose – The aim of this paper is to investigate if top executives’ turnover affects the performance of a company and if it differently impacts the performances of a healthy and a restructured company. Design/methodology/approach – In order to investigate the impact of the renewal of both members of the board of directors and CEO impacts on company profitability, we performed a quantitative analysis based on a sample of 144 Italian companies using a logit model. Findings – The findings show that corporate governance changes influence the performance of a company. However, the results show a different impact for healthy and restructured companies. The renewal of the board of directors negatively affects the performances of a healthy company while influences positively the probability of a future increase in performances for restructured companies, suggesting useful implications for scholars and practitioners. Originality – This analysis confirms that the renewal of top executives can affect the probability of an increase of company performances, especially for distressed firms, contributing to existing literature which is still limited and focused only on few countries. Practical implications – Our research could be helpful for managers and practitioners in the current context where the COVID-19 strongly affects companies’ performances, leading to a huge number of businesses in a state of crisis. In particular, the results of this research suggest the importance of renewing corporate governance for raising the survival chances of distressed companies.