Management Myopia Research Articles

Management myopia and corporate innovation in China: Focus on the moderating role of equity incentives

This study selected a sample of A-listed companies on the Shanghai and Shenzhen stock exchanges from 2010 to 2022 to examine the relationship between management myopia and corporate innovation. The findings are as follows. First, management myopia has an inhibiting effect on corporate innovation, whereas market competition significantly enhances such innovation. Second, equity incentives can alleviate the inhibiting effect of management myopia on corporate innovation by motivating managers to focus more on long-term development and innovation investments. Third, market competition has different impacts on innovation of companies with different levels of ownership. In this regard, its impact on companies with high equity concentration is more significant. Finally, market competition has different impacts on the innovation of state-owned and private enterprises, with a more significant impact on the latter.

Social credit scoring system and corporate pollution governance: Insights from China's Social Credit System Construction

This study examines the effect of China's Social Credit System (CSCS) construction as a quasi-natural experiment on corporate emissions. The System collects and shares credit information, including environmental credit for firms. Using 30,766 firm-year observations of Chinese non-financial listed firms from 2007 to 2021 and pilot programs in the construction of the CSCS in various cities, we document that firms located in cities with the CSCS system lower their emissions than those in cities without the CSCS system. Additional analysis suggests that the lower emission for the CSCS firms is due to enhancing environmental information disclosure, advancing technological progress, and alleviating financial constraints. The moderating analysis reveals that the impact of the CSCS on restraining corporate emissions is more salient when a firm: (1) belongs to a heavily polluting industry or is privately-owned; (2) has management myopia or lack of environmental awareness; or (3) has a weak internal and external monitoring.

Cost of debt financing, stock returns, and corporate strategic ESG disclosure: Evidence from China

AbstractWhether corporate strategic Environmental, Social, and Governance (ESG) disclosure can be effectively screened by external markets still needs more empirical support. Despite numerous studies confirming the positive impact of ESG, the issue of strategic ESG disclosure has yet to receive sufficient attention. This study examines the impact of ESG greenwashing on the cost of debt financing and stock returns using panel data of Chinese A‐share listed corporates from 2012 to 2021. The study finds that external markets fail to recognize ESG greenwashing in the short term, leading to a temporary reduction in the cost of debt financing and an increase in stock returns, but these effects are not lasting. Mechanism analysis shows that ESG greenwashing enhances corporate reputation and reduces the cost of debt financing through the reputation effect, stimulates investor sentiment, and improves stock returns through the sentiment effect. The study identifies management myopia, excessive power, financial distress, and information asymmetry as the main drivers. However, strong oversight by independent directors, involvement of Big Four audit firms, investor site visits, and high industry competition can mitigate these misleading effects. This research expands the understanding of the causes and economic consequences of corporate ESG greenwashing and provides empirical evidence for managing this phenomenon.

Can we rest easy under the registration-based IPO reform? Evidence from the Chinese growth enterprise market

The registration-based initial public offering (IPO) system is a pivotal initiative in China’s comprehensive capital market reform, but little is known about its effectiveness. Our study aims to explore the impact of the registration-based IPO reform on enterprises’ environmental, social, and governance (ESG) greenwashing behaviors. Drawing on data from 2,490 enterprises listed on the Chinese growth enterprise market and the main board of the Shenzhen Stock Exchange during 2012-2022, we find that the registration-based IPO reform significantly aggravates ESG greenwashing with an effect of 0.1696. Building upon this evidence, we explore the underlying mechanism. Peer competition and retail investor sentiment play a partial mediating role and become two channels through which the registration-based IPO reform may aggravate enterprises’ ESG greenwashing. Analysts’ attention can alleviate the impact of registration-based IPO reform on enterprises’ ESG greenwashing while management myopia intensifies it, and they both play a moderating role. Moreover, the aggravating effect of the registration-based IPO reform on ESG greenwashing is more pronounced in enterprises belonging to heavily polluting industries, in the Western region, and with low information transparency. Thus, our findings offer new insights into enterprises’ ESG greenwashing behaviors in the context of the registration-based IPO reform.

Management myopia and green investment: Evidence from China

AbstractThis paper examines the impact of management myopia on the investment behavior of green investors using A‐share listed companies from 2004 to 2020 in China. The research reveals that management myopia significantly inhibits the investment behavior of green investors. Through corporate reputation and the development of green technologies, management myopia affects the investment intentions of green investors. Environmental project subsidies do not mitigate the negative impact of management myopia on green investment intentions. Interestingly, compared to environmentally friendly projects categorized under “profit‐related” and “reward” headings, subsidies in the form of environmental project grants exacerbate the inhibitory effect of management myopia on green investment.

Can regional innovation policies promote corporate digital transformation? Empirical evidence from China’s national innovation demonstration zones

ABSTRACT Using a sample of A-share listed companies in Shanghai and Shenzhen from 2007 to 2022, this study constructs a multi-period difference-in-differences model with the establishment of national innovation demonstration zones (NIDZs) as a quasi-natural experiment to investigate the effect of a regional innovation policy on corporate digital transformation. The study finds that the government’s NIDZ policy has significantly promoted the digital transformation of enterprises. The policy effect is mainly reflected in promoting the application of the underlying digitalization technology. An analysis of the influence mechanism shows that NIDZs promote corporate digital transformation through innovation-driven government support and financing optimization effects. To promote corporate digital transformation and enhance enterprise value, NIDZs require relatively perfect digital infrastructure, a high level of intellectual property protection, non-state-owned enterprises, low management myopia, and manufacturing enterprises. The government can set up NIDZs and actively use regional innovation policies to promote the digital transformation of enterprises, explicitly solving the challenging issues that enterprises face in the transformation process.

Stock Overvaluation, Management Myopia, and Long-Term Firm Performance

Stock Overvaluation, Management Myopia, and Long-Term Firm Performance

Can the Relative ESG Gap Reduce Managerial Myopia? A Study Based on the “Tunnel Effect”

ESG concepts are regarded as a feasible method for enterprises to obtain a sustainable competitive advantage, but whether enterprises can spontaneously and proactively implement ESG concepts is the key to the sustainable development of ESG. Focusing on listed companies with relatively slow ESG performance and carrying out investigations from the perspective of the “tunnel effect”, this study explores whether the relative ESG gap can motivate listed companies to learn and compete in ESG and whether this behavior can alleviate managerial myopia and achieve the long-term development of the company. This study reports that there is a “tunnel effect” in the relative ESG gap in listed companies with relatively lagging ESG performance; this should motivate such listed companies to improve their ESG performance and reduce managerial myopia through voluntary disclosure. Further results show that there is a “tunnel effect” in the relative ESG gap in both state-owned and non-state-owned listed companies. The learning behavior is more obvious in listed state-owned companies, and the reduction in management myopia via ESG performance is also stronger in such companies. This study expands the research on the influence of ESG on corporate behavioral decision making in the context of sustainable development, and it also provides useful references for reducing managerial myopia from the perspective of inter-firm learning competition.

From performance to horizon: managements’ horizon and firms’ investment efficiency

PurposeThis study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock market performance data. The authors use the measure to explore the impact of managements’ horizon on firms’ investment efficiency.Design/methodology/approachThe authors rely on two commonly used but uncorrelated measures of management performance: accounting performance (return on capital employed, ROCE) and stock market performance (average abnormal return, AAR). The authors combine these measures to develop a multidimensional framework for performance, which classifies firms into four groups: efficient (high accounting and high market performance), poor (low accounting and low market performance), myopic (high accounting and low market performance) and hyperopic (low accounting and high market performance). The authors validate this framework and deploy it to explore the relationship between horizon and firms’ investment efficiency.FindingsIn validation tests, the authors show that management myopia (hyperopia) explains firms’ decision to cut (grow) research and development investments. Further, as expected, myopic (hyperopic) firms are associated with significantly more (less) accrual and real earnings management. The empirical tests on the link between horizon and investment efficiency suggest that myopic managers cut new investments while their hyperopic counterparts grow the same. Ultimately, the authors find that myopia (hyperopia) exacerbates(mitigates) the over-investment of free cash flow problem.Originality/valueThe authors introduce a framework for assessing management’s horizon using easily obtainable measures of performance. The framework explains inconsistencies in prior empirical research using different measures of performance (accounting versus market). The authors demonstrate its utility by showing that the measure explains decisions around research and development investment, earnings management and firm investments.

Management myopia and corporate ESG performance

Management is the helmsman of corporate strategy and plays a leading role in the decision-making of corporate sustainable development. This paper uses the index of manager myopia constructed by text analysis to investigate its impact on corporate ESG performance. The conclusion of this paper shows that the management myopia significantly reduces the ESG performance of enterprises, and the results remain robust after a series of robustness tests. Further research finds that the negative effects of management myopia on corporate ESG are mitigated by internal governance level of enterprises and external supervision pressure, but strengthened by fierce product market competition. Finally, the results of economic consequences test reveal that the decline in ESG performance caused by management myopia leads to the reduction in the future value of the firm. This paper enriches the research on the influencing factors of corporate ESG, and provides reference value for promoting the sustainable development practice of enterprises.

Characteristics of Myopia in Children at Prof. Dr. I.G.N.G. Ngoerah General Hospital Period 2020/2021

Myopia is the main cause of visual impairment suffered by school-age children in the world. Myopia causes children unable to see clearly at a distance so that if not corrected it can affect children's activities and achievements. This study aims to determine the characteristics of myopia in pediatric patients who came at Eye Polyclinic Prof. Dr. I.G.N.G. Ngoerah in 2020/2021. This study is a descriptive retrospective cross-sectional design with total sampling from secondary medical record which analyzed and processed using SPSS. Based on the study results, it was found that 32 pediatric patients suffered myopia. The results showed that myopia was more common in women (59.4%) with an age range 6-12 years (62.5%). Most of the patients were from Denpasar (62.5%). All cases of myopia were present in both eyes or bilateral (100.0%). The most common classification of myopia found compound myopic astigmatism in right eye (53.1%) and left eye (65.6%). Patients most often experienced moderate visual impairment with visual acuity <6/18 – 6/60 in right eye (46.9%) and left eye (40.6%). The highest degree of myopia was low myopia (40.6%) in right eye with a correction lens <S-3.00 and high myopia in left eye (43.8%) with >S-6.00. Most of patients experienced improvement to normal vision 6/6 – 6/12 after correction in right eye (59.4%) and left eye (65.6%). Amblyopia was found (56.3%) myopia in children. The results of this study are expected to be basis for further research and to realize the importance of preventing and proper management myopia in children.
 Keywords: Myopia, school-age children, visual acuity, degree of myopia, post-correction visual acuity.

State ownership, managerial myopia and corporate green transition: evidence from listed companies in China

PurposeGreen transition is a long-term direction of corporate development that can achieve sustainable corporate development. This study aims to investigate whether state ownership promotes corporate green transition by mitigating managerial myopia and the impact of environmental regulations, internal controls and ownership on this pathway.Design/methodology/approachUsing data from 2,608 Chinese listed companies for 2010–2019, the authors investigate the relationship between state ownership, managerial myopia and corporate green transition by using fixed-effects and moderated mediation models.FindingsState ownership can boost green transitions and alleviate managerial myopia. Managerial myopia mediates the relationship between state ownership and corporate green transition. Furthermore, environmental regulations, internal controls and ownership moderate the mediating effects of managerial myopia.Originality/valueThe authors construct a multidimensional green transition index to examine the influence of state ownership on corporate green transition behavior and reveal the underlying mechanism by which state ownership promotes green transition by “mitigating managerial myopia.” This study enriches the literature on state ownership, management myopia and green transition and provides important evidence for the promotion of mixed ownership reforms.

Board Informal Hierarchy and Digital Transformation: Evidence From Chinese Manufacturing Listed Companies

Board informal hierarchy plays a crucial role in board governance and corporate strategic decision-making. The article empirically examines the impact of board informal hierarchy on corporate digital transformation based on relational contract theory, using a fixed-effects model with Shanghai and Shenzhen A-share listed manufacturing companies from 2012 to 2019 as research subjects. The findings of this study demonstrate a positive correlation between board informal hierarchy and digital transformation. Specifically, the presence of a chairman with the highest rank in the informal hierarchy strengthens this relationship, while the presence of a CEO with the highest rank weakens it. Mechanistic analysis shows that informal hierarchy accelerates digital transformation through three channels: improving board decision-making efficiency, mitigating management myopia, and facilitating information communication. This study extends existing research. On the one hand, this paper explores the drivers of digital transformation in manufacturing firms at the level of corporate governance and board characteristics. The findings provide empirical evidence to support the understanding of transformational change behaviors of manufacturing enterprises in the digital economy. On the other hand, it also opens up the “black box” of the internal operation of the board and provides valuable lessons for strengthening board governance. JEL Classification: D21; M12; Z13.

Can digitalization facilitate cross-border M&A? Evidence from Chinese A-share listed companies

This paper investigates the impact of digitalization on cross-border M&A completion probability. Using a sample of Chinese firms listed on the A-share market between 2005 and 2021, we find that firm digitization significantly promotes cross-border M&A completion. The finding still holds after a series of robustness tests. Further analysis indicates that the promotion effect is more pronounced in samples with high finance constraints, technology-based M&A transactions, and short institutional distances. Further, we provide evidence that digitalization facilitates cross-border M&A by enhancing firms' innovation capabilities and reducing management myopia. This paper provides new light on how the development of digital technologies is changing the ways publicly traded corporations behave internationally.

Does managerial myopia hinder green technological innovations? an examination based on Chinese-listed heavy polluters

Under the guidance of a high-quality development strategy, upholding the long-term concept of green development is the foundation allowing polluting companies to resist external environmental threats and retain their legitimate business statuses. However, the top managers of companies do not always hold long-term perspectives. To this end, we investigate the impact of management myopia on green technological innovation and its mechanism of action for heavy polluters using zero-inflated Poisson regression analysis for 2007–2020 for A-share listed heavy polluters. The empirical results show that the logarithmic value of green technological innovation decreases 1.251 units for each 1-unit increase in the management myopia level demonstrated by heavily polluting enterprises. Moreover, these results are more significant in heavily polluting enterprises with high management shareholding and those that receive more government subsidies. However, managerial myopia is suppressed in heavily polluting firms with many independent directors and institutional investors. A further study found that managerial myopia had the most significant negative impact on green technological innovation for heavy polluters in the central region, and each 1-unit increase in the managerial myopia level decreased the firm’s green technology innovation level by 3.577 units. The findings of this paper have important implications for heavily polluting firms seeking to improve their senior management appointments and governance structures, promote green technology and technological innovation, and achieve high-quality corporate development.

Institutional investor horizons, ownership structure and investment efficiency in China

AbstractThis paper investigates the effects of institutional investor horizons on investment efficiency in China. By analysing 26,831 firm‐year observations from Chinese listed companies, we find that long‐term (short‐term) institutional ownership is negatively (positively) associated with the level of inefficient investments. A battery of robustness tests indicates causality. Further analyses reveal that the rise in environmental uncertainty and information asymmetry are transmission channels for increased inefficient investments. Moreover, we find that the single controlling shareholder and state owner can curb the management myopia induced by short‐term institutional investors while they do not impede the monitoring effort of long‐term institutional investors.

A Perspective on Management Myopia: The Impact of Digital Transformation on Carbon Emission Intensity

Digitalization has emerged as an indispensable pathway for enterprises aiming to achieve low-carbon development, demanding strategic implementation by managers who play a crucial role in shaping organizational outcomes. This study utilizes text mining and IPCC methods (based on The Intergovernmental Panel on Climate Change standards) to assess the level of digital transformation and enterprise carbon emission intensity among Shanghai and Shenzhen A-share listed companies from 2008 to 2015. This study also investigates the impact of digital transformation on enterprise carbon emission intensity and examines the influence of myopic characteristics among managers along with their underlying mechanisms. The results indicate that: (1) Digital transformation decreases enterprise carbon emission intensity, with robust results supported by instrumental variable test, the Oster test, confounding variable threshold impact test, etc. (2) Heterogeneity analysis demonstrates that digital transformation is particularly effective in reducing enterprise carbon emission intensity for companies located in cities without national carbon trading pilot policies, heavy industrial sectors, and those influenced by peer effects. (3) The study on mechanisms reveals that management myopia poses a barrier to the decarbonization process driven by digitalization. It further explores the moderating effects of green innovation, sustainable investment, and environmental awareness, revealing that management constrained by innovation myopia, investment myopia, and environmental responsibility myopia faces challenges in promoting decarbonization. By examining the internal aspects of management myopia, we provide valuable insights and recommendations for enterprises seeking to achieve decarbonization through digital transformation.

How does corporate ESG performance affect sustainable development: A green innovation perspective

This study examines the influence of corporate ESG performance on green innovation based on the data of 2024 A-share listed firms in China from 2009 to 2020. We find that ESG performance has a significantly positive impact on green innovation. Mechanism analysis reveals that excellent ESG performance contributes to relieving financing constraints, enhancing the level of corporate human capital, and improving management myopia, thus positively influencing corporate green innovation. Heterogeneity analysis shows that the positive effect of ESG performance on green innovation is more pronounced in firms with strong innovation capacity, non-state enterprises, firms in non-polluting industries, firms located in areas with high marketization, and firms in poor macroeconomic environments. Further analyses prove that good ESG performance also helps to enhance the quality of green innovation, the efficiency of green innovation, and the proportion of collaborative green innovation. These results offer important implications for improving firm ESG performance and promoting corporate green innovation.

Research on Financial Risk Path Identification of New Energy Enterprises Based on ISM-MICMAC Model

Due to the relatively low input and output of developing countries in the field of new energy at this stage, it is particularly important to accurately identify the main influencing factors of financial risks of new energy enterprises. This paper takes the financial risk of China's new energy enterprises as the research object, identifies 17 factors affecting the financial risk of new energy enterprises after sorting out relevant indicators, and innovatively uses ISM (Interpretative structural model) -MICMAC (Matrix of Cross-Impact Multiplications Applied to Classification) to show the logical level and influence relationship between various factors. The results show that new energy enterprises should first consider the fundamental factor of management myopia; strengthen the control of intermediate factors, such as lack of environmental awareness, and improper investment; monitor the appearance layer factors with strong dependence at any time, such as inappropriate technical talent reserve. This study is helpful to provide practical significance for the identification of the financial risk chain of new energy enterprises.

The governance role of corporate party organization on innovation

In this paper, we provide evidence supporting the positive effect of corporate party organizations on Chinese state-owned enterprises’ innovation outputs. To illustrate the underlying mechanisms, we verify the impact of corporate party organizations in reducing management myopia and over-invest in R&D activities, supporting the governance role of the corporate party committee. Further, the effect of corporate party organization is weakened when alternative governance mechanisms work. We adopt several methods to address endogeneity concerns and find our results robust. Overall, this paper contributes to the mixed evidence on governance and innovation from the perspective of a unique arrangement, corporate party organizations.