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Leadership structure and strategic change: the case of incomplete corporate spinoffs

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  • Babaghaderi, Azadeh
  • Kolahgar, Sam

Abstract

Spinoffs are high-stakes strategic decisions that can unlock substantial shareholder value, yet approximately 39 % of those announced in the U.S. remain incomplete. This study examines how CEO duality and board independence influence the likelihood of spinoff incompletion. Drawing on a sample of 1,472 announced spinoffs from 1985 to 2016, we find that CEO duality significantly increases the probability of incompletion. However, this effect is mitigated in firms with highly independent boards. Robustness checks, including split-sample analysis, instrumental variable Probit models, and survival analyses, confirm the stability of our findings across different specifications and variable treatments. While CEO duality does not significantly affect the time required to complete a spinoff, boards with higher independence levels are associated with slightly longer completion timelines, suggesting a more deliberate evaluation process that may improve outcomes. These results advance understanding of the governance mechanisms underlying failed strategic initiatives and highlight the risks associated with concentrated leadership. Our findings offer theoretical contributions to agency theory, upper echelons theory, and corporate governance research, while also providing practical implications for firms and shareholders seeking to improve the execution of complex strategic decisions. Leadership structure and board composition, we argue, are central to shaping the success or failure of spinoff plans.

Suggested Citation

  • Babaghaderi, Azadeh & Kolahgar, Sam, 2025. "Leadership structure and strategic change: the case of incomplete corporate spinoffs," Journal of Business Research, Elsevier, vol. 197(C).
    • Handle: RePEc:eee:jbrese:v:197:y:2025:i:c:s0148296325002772
    DOI: 10.1016/j.jbusres.2025.115454
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