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The Impact Of Performance Expectation Gap On Corporate Strategic Change—Evidence from Listed Companies in the IT Industry

Author

Listed:
  • Luyao Huangfu
  • Fang Wang
  • Dan Liu
  • Nan Wu

Abstract

Based on the panel data of Chinese listed companies in the information technology industry from 2007 to 2018, this paper uses a fixed-effect model to study the relationship between corporate performance expectation gap and strategic change and analyzes the moderating effect of private benefits of management control and equity incentive. It is found that the greater the gap between corporate performance expectations is, the lower the frequency of corporate mergers and acquisitions is, and the higher the frequency of corporate asset divestment is. Further research finds that private benefits of management control weaken the positive correlation between corporate performance expectation gap and asset stripping frequency. Equity incentive strengthens the negative correlation between corporate performance expectation gap and corporate mergers and acquisitions frequency, and the positive correlation between corporate performance expectation gap and corporate asset stripping frequency. Based on this, when enterprises carry out strategic change, enterprises should choose the direction of strategic change according to the degree of performance expectation gap, and promote the effective realization of strategic change by improving the governance of the board of directors and optimizing the management incentive mechanism.

Suggested Citation

  • Luyao Huangfu & Fang Wang & Dan Liu & Nan Wu, 2021. "The Impact Of Performance Expectation Gap On Corporate Strategic Change—Evidence from Listed Companies in the IT Industry," International Business Research, Canadian Center of Science and Education, vol. 14(11), pages 1-46, November.
    • Handle: RePEc:ibn:ibrjnl:v:14:y:2021:i:11:p:46
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    References listed on IDEAS

    as
    1. Avi Fiegenbaum & Howard Thomas, 1995. "Strategic groups as reference groups: Theory, modeling and empirical examination of industry and competitive strategy," Strategic Management Journal, Wiley Blackwell, vol. 16(6), pages 461-476.
    2. Armstrong, Christopher S. & Larcker, David F. & Ormazabal, Gaizka & Taylor, Daniel J., 2013. "The relation between equity incentives and misreporting: The role of risk-taking incentives," Journal of Financial Economics, Elsevier, vol. 109(2), pages 327-350.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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