The Impact of Managers' Self-interested Behavior on the Firm's Strategic Decision-making

Abstract

Based on agency theory, this paper investigates the impact of managerial self-interest, especially managerial temporal myopia, on corporate strategic decision-making. This myopic behavior can lead to investment myopia, which in turn affects investment decisions. Moreover, it may result in financial distress and stock price crashes, ultimately affecting financing decisions. Firstly, it explores how managers exploit information asymmetry to advance their personal interests, consequently undermining the long-term value of the company. Next, the study examines the specific manifestations and causes of managerial temporal myopia, explaining how short-term behaviors in investment, financing, and debt management affect corporate decision-making. Finally, the paper proposes strategies to mitigate managerial self-interest, including curbing the tendency towards short-term gains, enhancing information disclosure, and restricting managerial expansion without adequate supervision. This analysis aims to provide valuable guidance for corporate governance, helping enterprises to make scientifically sound strategic decisions while considering managerial self-interest. The objective is to avoid long-term losses caused by myopic behavior.