UPPER ECHELONS AND BOARD CHARACTERISTICS OF TURNAROUND AND NONTURNAROUND DECLINING FIRMS

Despite the publication ol a number of studies examining the top manag ement team (TMT) and board characteristics of failing firms, empirical studies of how turnaround firms differ from failing firms on such cha racteristics ave scarce. To examine this understudied issue, we use a matched-pair sample to test whether turnaround and nonturnaround decli ning firms have significant differences in board composition, board si ze, CEO duality, TMT size, and TMT change. The results indicate that t urnaround firms are move likely to have CEOs that are also board chair s, medium-sized boards, and greater outsider control ol the board. Als o, by the end of their recoveries, turnaround firms have TMTs employin g a significantly smaller proportion of their pre-decline top managers as compared to nonturnaround firms. Overall, these findings imply tha t turnaround firms develop strategic decision-making structures that a re fast yet influenced by outside perspectives. (C) 1997 Elsevier Scie nce Inc.