Discretionary Behavior Research Articles

Corporate governance mechanism and financial performance: role of earnings management

The mechanism of good corporate governance is used to prevent the management of the company from engaging in unethical actions, such as the earnings management. It can be an effective way to control management. This study aims to analyse corporate governance, consisting of the size of the board of commissioners, the size of the sharia supervisory board, and the audit committee on financial performance, measured as return on assets (ROA), with earnings management as the mediating variable. The sample used for the study consists of nine Indonesian shariah banks and the period of analysis is 2013-2017. The results of the path analysis show that the size of the board of commissioners has a negative effect on the company’s ROA. The study also finds that the size of the sharia supervisory board, audit committee and earnings management do not have significant effects on financial performance. Earnings management has a positive mediating role on the relationship between the board of commissioners, the audit committee and ROA. This finding indicates that the existence of the board of commissioners is effective in supervising the management. Thus the mechanism corporate governance can limit the managers’ discretionary behavior and prevent earnings management.

BANK EARNINGS MANAGEMENT AND DIVIDEND POLICY UNDER AGENCY PROBLEM CONTEXTS

Using a large sample of U.S. bank holding companies (BHC) from 2000:Q1–2017:Q4, we investigate the impacts of dividend policy to bank earnings management, and document that banks that pay dividends tend to be less opaque than banks that do not pay dividends. The dividend policy not only impacts the conditional average earnings management of banks, but also exerts influence on their dispersion. The impact of dividend policy appears to be more profound for highly opaque banks. We identify different conditions that motivate different discretionary behaviors of banks, which allows us to better observe different managerial motives between dividend-paying and dividend-non-paying banks. Under high information asymmetry context, there is valuably additional information conveyed by paying dividends, and it follows that the role of dividends as a means of conveying information is more pronounced. For banks subject to high agency problems, paying dividends make them to be less opaque through reducing the discretionary behaviors.

Loan Loss Provisioning of US Banks: Economic Policy Uncertainty and Discretionary Behavior

This paper examines the effect of economic policy uncertainty (EPU) on loan loss provisions (LLP). Using a sample of 6,384 US banks and yearly data from 2009-2019, the findings reveal that in times of higher economic policy uncertainty, banks tend to increase their loan loss provisioning. Considering the four components of EPU (the news-based, tax expirations, consumer price index forecast disagreement, and government purchases forecast disagreement), the findings document that the majority of the explanatory power on loan loss provisions originates from news-based and tax expiration indices. Moreover, US banks discretionally use loan loss provisions in normal times, especially for capital management and income smoothing. Considering the possible interaction of such discretionary behavior with EPU, we observe that US banks use provisions for income smoothing rather than for capital management during such uncertain times, and loan loss accruals are exacerbated through income smoothing under uncertainty. Additional analysis indicates that private banks conduct more income smoothing through provisions in uncertain times as compared to listed banks. The findings of the study highlight EPU as an additional procyclical factor to influence bank LLP behavior and offer some relevant policy implications.

Productivity or illusion? Assessing employees' behavior in an employability paradox

PurposeEmployability has been studied in different disciplines (e.g. occupational health and career) and has been seen as a personal resource with overall positive outcomes. The present research investigates the behavioral implications of (perceived) employability and responds to the recent call of research that perceived employability could have not only positive but also negative behavioral implications. Furthermore, this study aims to reduce the asymmetry of data set and replication of existing results in non-Western economies.Design/methodology/approachMultinationals were taken as context to test the hypotheses, and a sample of 230 white-collar employees was drawn from fast-moving consumer goods companies. Partial least square–structural equation modeling through SmartPLS was used to analyze the data.FindingsIn light of social exchange theory, the present research identified the dark side of employability, which may impair the employer–employee relationship. Perceived employability did not relate significantly with in-role performance, nor did it correlate with organizational citizenship behavior, that is, a discretionary behavior promotes the efficient and effective functioning. However, perceived employability had a positive significant relationship with OCBI, that is, helping supervisors and coworkers with heavy workloads, as well as with counterproductive behaviors.Practical implicationsEmployable workers have always been considered key players and an asset for organizations due to their high productivity skills. A balanced employer–employee relationship creates a mutual win; therefore, a carefully drafted human resources policy may help organizations to fulfill the needs of employable workers and reap optimal benefits in terms of productivity. Behavioral training to supervisors/managers may help to assertively deal with employees' negative behavior without further escalation.Originality/valueThe present study suggests a paradoxical perspective in employability – a behavior debate, which is in an initial phase where it is difficult to determine whether employable workers are productive to the organizations or not.

Feature: Five Ways to Encourage Stakeholder Voice in the Healthcare Industry

This article discusses the construct of stakeholder voice. It highlights the importance of encouraging voice, which is the discretionary behavior of asserting ideas, criticisms, or improvements for organizational functioning within healthcare organizations. Five methods by which healthcare facilities can motivate, support, and maintain voice engagement from a range of individuals (including employees, managers, patients, and caregivers) are elaborated. Given the importance of collective work and opinion sharing in generating innovative solutions to dynamic healthcare issues, the value of enabling voice within such settings should not be underestimated.

Abusive supervision and frontline employees’ attitudinal outcomes

PurposeThis study aims to examine a moderated mediation model that explains how abusive supervision influences employees’ capacity to satisfy customers (via their silence behavior) and how a customer-oriented work climate moderates the indirect influence of abusive supervision on frontline employees’ (FLEs) capacity to satisfy customers.Design/methodology/approachA time-lagged design was used to collect data from 335 FLEs of 57 hospitality organizations. A multilevel analysis was performed to test the hypotheses underpinning the study.FindingsThe findings revealed that employees are more likely to remain silent when they experience abusive supervision and this silence directly affects their ability to serve customers. The effect that abusive supervision has on silence behaviors is stronger when organizational customer orientation is low.Practical implicationsThe study findings can provide hospitality managers with a better understanding of the complex relationship between supervisory behaviors and the organizational environment and how these factors influence employees’ discretionary behaviors (e.g. decision to intentionally withhold information) and capacity to serve customers.Originality/valueThe findings provide a novel contribution by explaining how abusive supervision affects hospitality employees’ capacity to serve customers and when this effect is more pronounced. These findings highlight that hospitality organizations need to understand that when leader behavior does not align with what is prescribed for a customer-oriented service climate, the benefits of a favorable work climate do not exist.

Organisational citizenship behaviour: a review

Organisational effectiveness is fundamental for sustainability and profitability. Effectiveness is measured observing the degree of profit, the reduction of the costs, the production quantity, efficiency and organisational citizenship behaviour (OCB). OCB is the willingness of an employee to perform tasks which are not officially and directly required by the employer, thus do not have any official and direct recompense from the contractual relations. This discretionary behaviour is always related to an enhancement perceived by the organisation. The review covers the last three decades of research and development in the organisational citizenship behaviour literature and has a special focus on literature from 2010 to 2019. Research led to consider these main outcomes of OCB namely compliance, altruism, organisational justice related to a fair environment workplace, perceived organisational support (POS) related and enhanced by a higher level of collectivism, power distance and uncertainty avoidance; procedural justice (PJ); transformational leadership (TSL) and the psychological contract (PC). This research would assist academicians, corporates and the general public understands the concept by the critical analysis conducted.

Unplugging or staying connected? Examining the nature, antecedents, and consequences of profiles of daily recovery experiences.

Research on workplace recovery recognizes that employees must restore lost resources after work to improve their subsequent well-being and performance. Scholars have noted that employees' recovery experiences-psychological detachment, relaxation, mastery, and control-vary day-to-day, yielding crucial implications for the aforementioned outcomes. Yet, despite these important theoretical and empirical insights, researchers to date have not comprehensively examined multiple daily recovery experiences in conjunction, instead studying the unique effects of only 1 or 2 experiences in isolation. Using a person-centric view of employees' recovery experiences, the current study examines whether profiles of daily recovery experiences occur for employees, and how these profiles (a) vary in membership from one day to the next, (b) are differentiated by daily job demands and resources experienced at work, and (c) predict employee well-being and discretionary behaviors during the subsequent workday. Using experience sampling data from 207 full-time employees, results revealed 5 profiles of daily recovery experiences that exhibited distinct relations with within-person antecedents and outcomes. As such, the current investigation represents a necessary first step in understanding how employees jointly experience recovery in relation to their daily work and well-being. (PsycINFO Database Record (c) 2019 APA, all rights reserved).

Psychological contracts and discretionary behaviour in Nigerian academics

Psychological contracts and discretionary behaviour in Nigerian academics

Organizational Citizenship Behavior: A Review

Organisational effectiveness is fundamental for sustainability and profitability. Effectiveness is measured observing the degree of profit, the reduction of the costs, the production quantity, efficiency and organisational citizenship behaviour (OCB). OCB is the willingness of an employee to perform tasks which are not officially and directly required by the employer, thus do not have any official and direct recompense from the contractual relations. This discretionary behaviour is always related to an enhancement perceived by the organisation. The review covers the last three decades of research and development in the organisational citizenship behaviour literature and has a special focus on literature from 2010 to 2019. Research led to consider these main outcomes of OCB namely compliance, altruism, organisational justice related to a fair environment workplace, perceived organisational support (POS) related and enhanced by a higher level of collectivism, power distance and uncertainty avoidance; procedural justice (PJ); transformational leadership (TSL) and the psychological contract (PC). This research would assist academicians, corporates and the general public understands the concept by the critical analysis conducted.

Workplace Spirituality and Organisation Based Self Esteem as Mechanisms Linking Spiritual Leadership with Organisational Citizenship Behaviour: Perceived Organisational Support as a Moderator

The aim of this study is to investigate the correlation among spiritual leadership (SL) and organisational citizenship behaviour (OCB) with two mediating variables workplace spirituality (WPS) and organisation based self-esteem (OBSE). In addition, this study also investigated perceived organisational support (POS) as a moderator in the correlation between SL and WPS. This study used the survey method to collection data from respondents using a questionnaire. To measure variables items, a 5-point Likert type scale is used. Partial least squares-structural equation modelling (PLS-SEM) technique was used for data analysis. The survey included 220 participants from the Islamic educational institute in Thailand, including educational staff and teachers. Five out of eight hypotheses proposed were supported by the results. The OBSE played a partial mediating role as a motivational concept for the followers in SL and OCB relationship. The lack of existing literature on the spiritual leadership adoption in Islamic educational institutions limits the scope of the study system debate. The insights derived from this research into the relationship and understanding between SL and organisational citizenship behaviour among Muslim educators. While a wide variety of research in leadership has embraced a number of leadership theories, the findings have changed the emphasis to spiritual leadership as a core determinant of power in a religious organization. Although extensive research literature on leadership has followed a number of leadership theories, the findings have changed the emphasis on following SL in religious institutions as a key determinant of discretionary behaviour. Teachers with discretionary behaviours are in dire need of Islamic institutions. As a result, SL has shown an important correlation with OCB and OBSE. This helps promote follower's intrinsic wellbeing by developing a shared vision through which people help society by serving others and can achieve their highest life goals and give people a sense of appreciation. This research improves academic knowledge about the role of SL that is a growing area of interest and relatively new to academicians and management in influencing academic staff and teachers’ organisational citizenship behaviour in both theory and practice.

Quality Analysis of Earnings Reported by Banks in Dynamic and Less Dynamic Financial Markets by Applying IAS 39 for Measuring Financial Instruments-Case Study: Mozambique and Portugal

The present study aimed to analyse the quality of the earnings reported by banks inserted in dynamic and less dynamic financial markets, associated with IAS 39 as measurement standard of financial instruments, from 2013 to 2017. The study consisted of the analysis discretionary accruals of banks operating in different markets, namely Mozambican and Portuguese. Discretionary accruals were estimated based on the modified Jones (1991) model. The study results indicate that there is evidence of discretionary behaviour in the reported earnings, and is high to the dynamic markets context. On account of the previous finding, the study has drawn the differences in the use of financial instruments. It was found out that Mozambican banks use few instruments; however, the difference is meaningless. A gross part of Financial Instruments Available-for-Sale and used by Mozambican banks are made up of treasure obligations, which may partly explain the reduced discretionary behaviour compared to Portuguese banks.

Customer in-role and extra-role behaviours in a retail setting

PurposePrior research does not provide a clear picture of how managers can effectively manage customer in-role and extra-role behaviours in a retail setting. This study aims to test the differential impact of the two main customer relationship predictor paths – identity-based and satisfaction-based paths – on customer in-role and extra-role behaviours.Design/methodology/approachA random sample of 500 customers from the flagship store of an up-market, international department store chain participated in a written survey. Purchase spending data for each customer was obtained from the retailer’s loyalty card database.FindingsThe two studied predictor paths possess a differential impact on customer extra-role behaviours. Civic virtue and co-creation behaviours are exclusively driven by the identity-based path, whereas sportsmanship is driven solely by the satisfaction-based path. Moreover, the identity-based path impacts purchase behaviour only when symbolic purchase motivation is high. Overall satisfaction has no impact on purchase behaviour.Research limitations/implicationsIn some retailing contexts, extra-role behaviours such as co-creation or civic virtue might simply be irrelevant (e.g. discount chains).Practical implicationsManagers, who have the intention to stimulate customers to give constructive feedback on products or services, or to involve them in co-creation activities, are well advised to also invest in identity-based path activities.Originality/valueThis study is the first to empirically test the effects of customer identification and overall customer satisfaction on the various dimensions of customer in-role and extra-role behaviours. Customer extra-role behaviours should not be conceptualised as one global construct but should comprise distinct dimensions of discretionary behaviours that have different antecedents.

Impact of destination psychological ownership on residents’ “place citizenship behavior”

Abstract The residents of a destination play an important role in shaping a strong brand for that destination. However, little research has been done on how and why residents show discretionary behaviors to promote the effectiveness of their brand. This study applies the novel concept of residents' ‘place citizenship behavior’ to advance this research area. Specifically, we empirically examined the impact of destination residents' psychological ownership on their place citizenship behavior, and the findings reveal that place citizenship behavior is composed of positive word of mouth (WOM), helping behavior, supporting behavior, tolerant behavior, and protecting behavior. Destination psychological ownership positively affects place attachment, which further affects place citizenship behavior. Residents who have high self-efficacy are more likely to exhibit place citizenship behavior than those low in self-efficacy, even when they have similar levels of place attachment. This study provides theoretical and managerial insights into understanding the roles of residents in building a popular destination.

Consequentes de Motivação do Serviço Público: Proposição de um Framework de Análise em Organizações Públicas Brasileiras

O presente trabalho tem por objetivo propor um framework de análise para a Motivação do Serviço Público (MSP) em organizações do setor público brasileiro, mais especificamente, explorando seus reflexos sobre o Ajuste Indivíduo-Organização (AIO) e o Comportamento de Cidadania Organizacional (CCO). O modelo oferecido apresenta proposições elaboradas a partir da teoria e, uma vez validado empiricamente, possibilitará investigar as influências da MSP sobre a percepção de congruência de valores entre indivíduo e organização e, também, sobre a propensão à manifestação de comportamentos discricionários que podem ser positivos ao ambiente organizacional.

Air travel attitude functions

Forecast growth in global demand for air travel is incompatible with emissions reduction targets. Scholarly attention is urgently needed to address attitude and behaviour change that supports sector-wide emissions reduction. Informed by the longstanding field of consumer psychology, the innovative approach adopted in this paper is to critically address air travel behaviour change through the application of attitude function theory. An analysis of the literature reveals that current attitudes reflect industry myths, and are further hampered by travellers’ knowledge gaps regarding the relationship between aviation and climate change. Five attitude functions are analysed in the context of attitudes to air travel; knowledge, utilitarian, value-expressive, ego-defensive and social adjustive functions. A conceptual framework is presented that integrates attitude structure, attitude function and the elaboration likelihood model of persuasion as an innovative approach to address discretionary air travel and behaviour change at the level of the individual consumer. Utilizing this framework, future research can help develop a critical understanding of the antecedents that shape attitudes. Researchers will be better positioned to create persuasive messages aimed at changing attitudes towards air travel, as arguably the key step towards the illusive goal of significant behaviour change and a shift towards more sustainable tourist mobilities.

Ethical leadership as a substitute for justice enactment: An information-processing perspective.

Why do employees perceive that they have been treated fairly by their supervisor? Theory and research on justice generally presumes a straightforward answer to this question: Because the supervisor adhered to justice rules. We propose the answer is not so straightforward and that employee justice perceptions are not merely "justice-laden." Drawing from theory on information processing that distinguishes between automatic and systematic modes, we suggest that employee justice perceptions are also "ethics-laden." Specifically, we posit that employees with more ethical supervisors form justice perceptions through automatic processing with little scrutiny of or attention paid to a supervisor's justice acts. In contrast, employees with less ethical supervisors rely on systematic processing to evaluate their supervisor's justice enactment and form justice perceptions. Thus, we propose that ethical leadership substitutes for the supervisor's justice enactment. Our results demonstrate support for the interactive effect of supervisor justice enactment and ethical leadership on employee justice perceptions, and we further demonstrate its consequences for employees' engagement in discretionary behaviors (citizenship and counterproductive behaviors). Our findings highlight an assumption in the justice literature in need of revision and opens the door to further inquiry about the role of information processing in justice perceptions. (PsycINFO Database Record (c) 2019 APA, all rights reserved).

A predictive model of discretionary lane change behavior considering human factors in the framework of time parameters

Lane changing is regarded as one of the most challenging behaviors of drivers. The lane-changing behaviors are divided into mandatory and discretionary. This study proposes an adaptive neuro-fuzzy model of discretionary lane-changing behavior in real traffic flow. Similar to other behaviors of drivers, lane changing is influenced by human factors, including age, gender, level of driving experience, hastiness, cautiousness, and alertness as well as environmental factors such as road and weather conditions. Identifying and measuring the said factors seem to be difficult or, in some cases, impossible. This study sorts out the lane-changing behavior into moments and two time intervals. In these time intervals, distance and relative speed, affected by the said factors, are accounted for in terms of time parameters and fed as inputs to the proposed predictive model. This is the innovative and distinguishing feature of the present study when compared to other researches. Finally, simulation and comparison based on real data indicate that when time parameters are considered and fed as inputs to model the error between the driver’s behavior and the proposed predictive model is less than when time parameter is not accounted for.

Effect of abusive supervision on subordinates’ discretionary behaviors

AbstractAlthough previous studies provide diverse perspectives on subordinate's deviant behavior as a reaction to abusive supervision (ABS), the influence of ABS on subordinates’ inter-personal relations received little attention. Grounded on social exchange theory, this study proposes that subordinates who are being abused by the same supervisor develop a bond among each other. That further provides strength to each of the abused group member to exhibit deviant behaviors against supervisor and non-abused peer group. Data were collected and analyzed through mediation analysis using AMOS. Using a sample of 920 employees from multi-sector organizations it was found that abused employees show citizenship behavior toward other abused peer-group members and counter-productive behavior toward supervisor and non-abused peer-group members. Moreover, citizenship behaviors created among the abused peer-group members partially mediate the relationship of ABS and counter-productive work behavior.

Business cycles and earnings management strategies: a study in Brazilian public firms,

ABSTRACT This study contributes to the literature dealing with the influence of macroeconomic factors on accounting information quality, since it analyzes the earnings management strategies of firms, specifically identifying different discretionary behaviors among economic cycles: 1) different levels of earnings management through accruals between phases of the business cycle, and 2) the trade-off between earnings management through accruals and real earnings management. The results indicate that the accounting information reported should be analyzed with greater caution by its users, especially in periods of great economic oscillations, when managers can increase or reduce opportunistic behavior. The research population comprised non-financial companies with shares traded on the São Paulo Stock, Commodities, and Futures Exchange (BM&FBovespa) and the sample was composed of 247 firms per year, covering the period from 2000 to 2015 and totaling 2,501 observations. The phases of business cycles were used as a proxy for the economic environment and were based on Schumpeter's (1939) study, which divides an business cycle into four distinct phases: expansion, recession, contraction, and recovery. Discretionary accruals were estimated according to the Pae (2005) and Paulo (2007) models. Real earnings management was estimated as described by Roychowdhury (2006), using only the abnormal behavior of production costs and operational decisions. The results of this research show that earnings management strategies, using either accruals or real manipulation, as well as the choice between these strategies, are impacted by the economic environment. The evidence suggests that managers have different opportunistic behavior in each phase of the business cycle. Specifically, they increase the level of discretionary accruals in contractionary phases and reduce it during recoveries, while they manage earnings downwards via real manipulation in recessions and contractions.