DETERMINANTS OF TURNAROUND The impact of Financial Resilience, ESG Performance and the moderating role of Reputation
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2025-07-07
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en
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Abstract
Drawing on legitimacy theory, this research investigates the effect of financial resilience and ESG
performance on the likelihood of turnaround. To do so, this research uses a sample of 706 firms in the
software and R&D industry with a total of 2132 observations in the period 2006-2023. This research
argues that financial resilience and ESG performance increase the likelihood of turnaround; this
relationship is moderated by reputation. Partial support is found for the former, which shows that
financial resilience lagged 2 years increases the chance of turnaround; however, results indicate a
curvilinear relationship, meaning that the effect accelerates at the ends of financial resilience. In terms
of the latter, no support is found. Similarly, reputation is found to moderate the relationship between
turnaround and financial resilience lagged 2 years, but not financial resilience lagged 1 year and ESG
performance. This research provides new insights relevant to the literature on financial resilience, ESG
performance, reputation, turnaround, and legitimacy theory.
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Faculteit der Managementwetenschappen