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The digital odyssey: Why management team stability matters for corporate transformation

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  • Zhang, Wei
  • Cheng, Na
  • Li, Qiuyang
  • Hu, Xinyi
  • Lei, Xue

Abstract

Why do companies with stable leadership teams outperform those with frequent executive turnover in digital transformation? We followed executive shake-ups and digital outcomes across Chinese listed firms, discovering a paradox: while transformation demands agility, stability wins. Our analysis reveals that management continuity enhances digital transformation by alleviating financing constraints and reducing agency costs. Yet this advantage only emerges in specific contexts: non-state-owned enterprises and smaller firms gain substantially from leadership stability, while state-owned enterprises show no effect. Our findings reframe corporate governance during strategic transitions, revealing how management team composition becomes a financial asset that influences firms' capacity to fund and execute long-term digital investments.

Suggested Citation

  • Zhang, Wei & Cheng, Na & Li, Qiuyang & Hu, Xinyi & Lei, Xue, 2025. "The digital odyssey: Why management team stability matters for corporate transformation," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325020628
    DOI: 10.1016/j.frl.2025.108808
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Jiangang, 2026. "Financial patience and technological ambition: How patient capital shapes corporate AI strategy," Finance Research Letters, Elsevier, vol. 91(C).
    2. Lin, Tiantian & Wang, Liying, 2026. "Stability breeds clarity? Top management team stability and analyst forecast accuracy," Finance Research Letters, Elsevier, vol. 91(C).

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