Executive Turnover,Team Reconstruction And Corporate Performance

As a very important arrangement of corporate governance,executive turnover,usually accompanied by the reconstruction of senior management team,strategic change,adjustment of governance structure and change of corporate performance,will have a significant and far-reaching impact on the future development of enterprises.Therefore,as one of the important indicators to measure the effectiveness of corporate governance,executive turnover has always been concerned by the theoretical and practical circles.Although scholars at home and abroad have conducted in-depth and systematic studies on top management turnover from the perspectives of enterprise performance,political correlation or financial policy and so on,there are few researches from the perspective of team faultlines.According to Upper Echelons Theory,senior management team has outstanding leadership in the organization,its composition changes will affect the whole organization structure and the change of the individual and group psychology in the enterprise,and individual and group mentality change will direct response to the corporate strategic decision-making and implementation process,and impact on business performance.In other words,the change of the human capital of the executive team is a comprehensive risk,which is related to the development or even survival of the enterprise.In view of the double significant impact of executive turnover on the team and the enterprise,it is particularly important to study its transmission mechanism and action path.Considering that in 2008 the world financial crisis on the impact of the global market,combined with the executive has personal characteristics data update delay,in order to make the empirical research results more reliable,this study selected the Shanghai and shenzhen two city of a-share listed companies in 2009-2016 data after the financial crisis as the initial sample,and a large number of missing values have been supplemented and perfected through manual collection of executives personal characteristics data.This paper mainly takes Team Faultlines Theory,Upper Echelons Theory,Trait Activation Theory,Punctuated Equilibrium Theory as well as the specialty of human capital theory as theoretical basis,and mainly uses statistical software Stata 13.0 and R language,by the building structure equation model(SEM),Sobel testing,ASW clustering algorithm,system GMM estimation,fixed effects model(FEM),Propensity score matching(PSM),group testing and other research methods.Based on of research perspective of team faultlines,this paper deeply discusses the dual influences brought by the change of senior management on the team level and the enterprise level,as well as how to affect the enterprise performance and its action path.At the same time,the main conclusions of this paper are summarized as follows.First of all,in the opening part of this paper,on the one hand,on the basis of reviewing and sorting out relevant literatures on senior management turnover,senior management team and faultlines,the previous research achievements are summarized and the problems to be solved are proposed to provide literature support for this study.On the other hand,on the basis of defining the concepts related to faultlines and team reconstruction,sorting out the theoretical basis and summarizing the previous measurement methods,the rationality and necessity of team reconstruction based on faultlines measurement is discussed and determined,which is intended to provide theoretical support for this study.Secondly,this paper examines the real impact of executive turnover on corporate performance.Although a large number of studies have been conducted on the relationship between top management turnover and corporate performance,the conclusions are not consistent.To sum up,there are three main viewpoints as follows: "scapegoat hypothesis","managerial competence hypothesis" and "vicious circle hypothesis".In this paper,the endogenous attribute of top management turnover is taken as the entry point of research,and the lag variable method and the systematic GMM estimation method in the dynamic panel model are mainly adopted to alleviate the reverse causal relationship between top management turnover and enterprise performance,and to explore the real impact of top management turnover on enterprise performance.The empirical results show that: the change of senior management has a significant negative impact on enterprise performance,that is,the change of senior management is not conducive to the improvement of enterprise performance;After grouping enterprise performance by annual-industry median,it is found that compared with enterprises with better performance,executive turnover has a more obvious negative impact on enterprises with poor performance.These results support the vicious circle hypothesis.Thirdly,this paper examines the impact of executive turnover on team refactoring.This part takes team Faultlines as the research perspective,and the theoretical basis of the study mainly includes the theory of team faultlines,trait excitation theory and discontinuous equilibrium theory.On the basis of dividing the team reconstruction into two dimensions of information related reconstruction and social type reconstruction,and dividing the hierarchy of the senior management team into two dimensions of power inequality and salary inequality,this paper empirically tested the influence and mechanism of senior management change on the team reconstruction by constructing the structural equation.The empirical test shows that the change of senior management not only intensifies the reconstruction of information related types,but also intensifies the reconstruction of social types.As the team was reconstructed by the faultlines measurement,it also showed that the change of senior management had an activation effect on the two dimensions of the faultlines.Further research shows that the change of senior management has triggered the division and struggle within the team by intensifying the power inequality and salary inequality of the senior management team,thus activating the dormant team fracture zone,highlighting the confrontation and division between the sub-teams within the team,and increasing the degree of team reconstruction.Finally,this paper examines the mediating effect of team restructuring on the relationship between top management turnover and corporate performance.This section on the basis of empirical research in the previous chapters,based on the research perspective of team faultlines,where Upper Echelons Theory is integrated with Team Faultlines Theory,examines whether the two dimensions of information related reconstruction and social type reconstruction play a mediating role in the relationship between top management turnover and corporate performance.The empirical test shows that the change of senior management reduces the enterprise performance by intensifying the degree of information related reconstruction.Executive turnover reduces corporate performance by exacerbating the degree of social typesetting.In other words,both information-related reconstructions and social categorical reconstructions play a mediating role in the relationship between top management turnover and corporate performance.This means that the change of senior management has a negative impact on enterprise performance by intensifying the reconstruction of information related type and the reconstruction of social sub-type.Further,to be on the safe side,this paper examines the impact of team restructuring on business performance.Previous studies on the composition and structure of senior management teams were mostly based on the perspective of mean value,heterogeneity or diversity,and it was concluded that the relationship between them and organizational results was inconsistent or even contradictory.This may be due to the fact that the executive's personal characteristics are separated and the explanation is limited based on the single characteristic dimension.Based on the research perspective of faultlines,this paper selects large sample data and considers the degree of team reconstruction from the joint attribute of personal characteristics of senior executives,which makes up for the deficiency of previous studies.The empirical study shows that both information-related restructuring and social sub-type restructuring have a significant negative impact on corporate performance.In other words,the greater the degree of team restructuring,the more detrimental to the improvement of corporate performance.After grouping the size imbalance of sub-teams by industry-annual median,it was found that compared with the group with high size imbalance of sub-teams,both the reconstruction of information-related teams and the reconstruction of social sub-teams had a more obvious negative impact on enterprise performance in the group with low size imbalance of sub-teams.In short,the more equal the size of sub-teams,the more irreconcilable the conflicts and confrontations between sub-teams may be,and the more detrimental to the improvement of enterprise performance.Based on the research perspective of team faultlines and the special stage of major personnel changes caused by top management turnover,this paper deeply and systematically investigated the real influence and action path of top management turnover on corporate performance of listed companies,in order to explain the mechanism of executive turnover and enterprise performance from a new perspective,and to provide reference for enterprises how to go through the period of change smoothly and quickly and minimize the damage to enterprise performance.At the same time,it also opens a "window" for other organizational changes to successfully and smoothly transition from one side,in order to be able to play the role of a brick to attract jade.The academic contributions of this paper are mainly reflected in the following aspects:(1)Previous studies on the relationship between top management turnover and corporate performance from the perspective of team faultlines are rare.Only a few of them are basically analytical or case studies.For the first time,this paper systematically studied the relationship among top management turnover,team restructuring and enterprise performance from the perspective of team faultlines.(2)Previous studies on the relationship between top management turnover and corporate performance have not jumped out of the accounting perspective.Drawing on relevant theories of psychology and organizational behavior,this paper explored a new research path from the perspective of team faultlines,and enhanced the in-depth understanding of the relationship between top management turnover and corporate performance.(3)This paper integrates the theory of team fault into the theory of high echelon formation,which not only enriches and improves the theory of high echelon formation,but also deepens and expands the research field of the theory of team fault.(4)Previous researches on the team faultlines almost set it as a static research situation a priori,and most of them focus on the economic consequences.This paper not only sets the research situation as a complex dynamic situation,but also focuses on the cause and activation mechanism of the team faultlines,which not only makes up for the deficiency of the research situation,but also improves the system of influencing factors of the team faultlines.The research conclusion of this paper not only has very important management enlightenment to the team level and enterprise level governance,but also has the special important reference significance to the general sense of team or organization governance.In particular,(1)On the basis of examining the real impact of executive change on corporate performance,this paper provides path guidance and focus point for how executive change affects corporate performance from a new perspective.(2)This paper provides the influence mechanism and focus point for the aggravation of team reconstruction caused by the change of senior management.(3)This paper provides the influence mechanism and focus point for how the aggravation of team reconstruction affects the improvement of enterprise performance.(4)This paper provides direction and focus point for the senior management team to reduce the damage caused by the faultlines.(5)This paper provides a reference for the general team or organization to bridge the fracture zone and governance.