Turning the Tide in the IT Sector : measuring the effectiveness of turnaround strategies for US IT firms that recovered from distress

• Autor(a) principal: Kimman, Daniel Casper Raymond
• Data de Publicação: 2023
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/42236
• topic: Turnaround strategies; Restructuring; Financial distress; Altman Z-score; US; IT Sector; Estratégias de reestruturação; Reorganização; Dificuldades financeiras; Índice de Altman Z; EUA; Setor de TI; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This dissertation examines the efficacy of operational, strategic, and financial turnaround strategies for 114 US IT firms listed on US stock exchanges that experienced financial distress, recovered, and increased their profitability, all between the period from 1998 to 2022. The study evaluates the effectiveness of these turnaround strategies by analyzing changes in key variables from a prior to distress to a post-distress period. The results show that increasing the operational efficiency has a positive impact on the change on the return on assets. Reducing research and development expenditures appears to be a viable strategy for improving profitability in the short term but not in the long term. Additionally, the size of the company before distress has a positive effect on the success of restructuring efforts. This study also finds an unlikely positive relationship between distress severity and positive change on ROA which can be attributed, among other factors, to a moderate correlation between size and distress severeness. The findings of this study provide valuable insights for IT firms seeking to implement successful turnaround strategies during periods of financial distress.