 Failure Escape: The role of advice seeking in CEOs’ awareness of financial difficulties and corporate restructuringRachid Achbah, Ivana Vitanova and Marc Fréchet Journal of Business Research, 2024, vol. 175, issue C Abstract: This study investigates CEOs’ advice-seeking behavior in small- and medium-sized enterprises (SMEs) and its influence on managing the financial difficulties these firms face. Grounded in the attention-based view of firms, our framework posits that CEOs’ advice seeking plays a sequential role in shaping a firm’s response to financial distress, by influencing CEOs’ awareness of financial difficulties and, subsequently, the restructuring process. We differentiate between advice sought from formal and informal advisors and consider top management team (TMT) functional diversity as a moderator. We test these hypotheses using a proprietary dataset of 407 financially distressed SMEs in France. Our results indicate that advice seeking significantly enhances CEOs’ decision to proceed to restructuring and this effect is mediated by the heightened financial awareness of CEOs. Furthermore, our research highlights the moderating role of the functional diversity of TMT members in the relationship between advice seeking and the restructuring decision. Keywords: CEO advice seeking; Restructuring; Formal and informal advisors; TMT diversity; Financial distress (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:175:y:2024:i:c:s0148296324000523 DOI: 10.1016/j.jbusres.2024.114548 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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