Abstract
Issues related to time horizon have received increasing attention from researchers and practitioners due to the perceived reluctance of executives to make long horizon investments. Temporal orientation is the relative importance of the issues in short versus long time horizon that individuals pay attention to. Due to the limited attention on individual temporal orientation despite its importance, our study examines temporal orientation of retiring CEOs by using content analysis of CEOs’ letters to shareholders. We propose that retiring CEOs are expected to be more short-term oriented as they are more motivated to engage in opportunistic behaviors towards opportunities with shorter term payoff. By incorporating prospect theory with agency theory, we also examine different components of CEOs’ incentives, including cash compensation, stock options and equity ownership, as boundary conditions that can alter retiring CEOs’ temporal orientation. We test our hypotheses on a sample of firms listed in the S&P 500 index from 2009 to 2013, and we find support for our theoretical arguments.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
