Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)

Abstract

Strategic Decision Making on Executive Turnover: Does Firm Performance Really Matter?

Author(s): Zuriadah Ismail, Anis Suriati Ahmad, Anuar Sarun, Nurhanie Mahjom

As the firm's business expands globally, there is a need for strategic decision-making to locate and remain firms flourish in a right marketplace. However, many firms are ill-prepared to carry out effective decision-making for on the executive’s selection that leading high performance. To analyse the issue on Malaysian context, the main objective of the study is to examine the effect of decision making on the event of executives turnover which based on performance measures for 173 listed firms on Bursa Malaysia and data for performance measures were represented by accounting and market which were collected from 2000 and 2015. The analysis indicates that firms with negative performance produce high turnover cases; however, weak documentation for both measures to evaluate the turnover decisions. Then, extended empirical examination for the forced turnover by firms emphasises that executives used their shareholding to exercise greater protection from being removed during poor performing stages. This evidence shows an explanation to management entrenchment hypothesis within Malaysian executives by translating greater voting power which makes the executive's position more secure. To curb the issue, there is a need for appropriate legal framework enforcement for monitoring the proportion of executive voting power, particularly in a family founding firm.