Role Of Managerial Discretion Research Articles

When MNEs bribe more? The role of managerial discretion

PurposeThis paper builds upon managerial discretion literature to study the relationship between foreign ownership and bribery intensity.Design/methodology/approachBuilding on World Bank’s data of 9,386 firms from 125 countries over the period 2006–2018, this paper uses Tobit regression, ordered probit and logit models to empirically test the hypotheses.FindingsThis paper finds that firms have higher bribery intensity when executives have a higher level of managerial discretion. Smaller firms with slack financial resources tend to bribe more when they face more government intervention, munificent and uncertain industrial environment.Originality/valueExtant corruption literature has addressed the effects of external institutional settings and internal corporate governance on bribery offering among multinational enterprises (MNEs). How much, and under what condition do top executives matter in bribery activities are yet to be answered. This paper integrates the concept of managerial discretion with corruption and bribery literature and offers a potential answer to the above question. In addition, prior corruption and bribery literature have primarily studied bribery through either micro- or macro-level analysis. This paper adopts multiple-level of analyses and elucidates the foreign ownership and bribery relationship from the organizational and industrial levels.

Free riding, empire building, and cost management prior to and post municipal enterprise mergers in Japan

ABSTRACT Opportunistic overspending tendencies induce inflexible cost adjustments and encourage bad cost stickiness. To examine whether this perspective applies to public sector organizations (PSOs) and mergers, we test the asymmetric cost behaviors, (1) free riding and (2) empire building, associated with managerial incentives in merged Japanese municipal enterprises. Consequently, we find evidence that prior to mergers, administrators’ opportunistic spending originating from free-riding behavior affects cost stickiness; conversely, an analysis of the post-merger sample shows that the empire-building incentive might partly mitigate sticky costs. Our results corroborate the contradictory role of managerial discretion in resource adjustment decisions between pre- and post-mergers.

Does Social Capital Affect Asymmetric Cost Behaviour? Evidence from U.S. Counties

In this study, we examine the impact of community social capital on asymmetric cost behaviour. Community social capital captures the strength of social norms and the density of social networks in a region. As such, it is a socio-economic factor that might affect managerial resource adjustment decisions via different channels. We find that firms headquartered in U.S. counties with high social capital exhibit significantly less asymmetry in cost behaviour. Community social capital restrains managers from taking opportunistic resource adjustment decisions that would induce cost stickiness. This is in line with our additional finding, that cooperative norms acting in an ethical manner are the dominant channel for our setting, by which community social capital affects cost behaviour. Our results corroborate the important role of managerial discretion in cost behaviour and make a significant contribution in understanding how local environmental factors explain differences in firms’ sticky cost behaviour.

In Good Times but Not in Bad: The Role of Managerial Discretion in Moderating the Stakeholder Management and Financial Performance Relationship

AbstractWe examine the role of managers in controlling the positive impact of stakeholder management (SM) on firm financial performance (FP) in the long term. We develop and test competing hypotheses on whether managers act as “good citizens” or engage in “self‐dealing” when allowed greater discretion. We test our assertions using dynamic panel data analysis of a sample of 806 U.S. public firms operating in 34 industries over 5 years (2005–2009). Our results indicate a nuanced influence of managerial discretion contexts on the SM‐FP relationship. We infer that given more latitude in decision making, as long as the “going is good” managers act as good citizens, but otherwise they revert to managerial self‐dealing. In light of our results, firms designing governance mechanisms to encourage managers to balance the needs of both shareholders and stakeholders must remain cognizant of contextual contingencies.

Stakeholder Management and Financial Performance: The Role of Managerial Discretion

We examine the role of managers in controlling the positive impact of stakeholder management (SM) on firm financial performance (FP) in the long term. We develop and test competing hypotheses on wh...

New CEO-TMT Relational Demography and Strategic Change: Moderating Role of Managerial Discretion

Prior research on CEO succession has largely focused on CEO attributes and had limited consideration of the interface between the new CEO and the top management team (TMT). This study intends to ex...

When do managers need managerial discretion for successful strategic change?

This study examines the role of managerial discretion in facilitating strategic change under a configurational perspective. Based on the resource-based view, we argue that the ability for strategic...

CEO Compensation and Cross-Border Acquisition Activity: A Situational Promotion Focus Perspective

This study draws from regulatory focus theory to offer a novel psychological explanation for how certain compensation elements affect CEOs' motivations to engage in cross-border acquisitions. Specifically the ‘gain/no gain' nature of stock options and retirement pay are theorized to elicit a situational regulatory promotion focus that increases attention on and sensitivity to reward aspects of risk taking. This subsequently increases the proclivity to engage in risk taking initiatives, such as cross-border acquisitions. The moderating role of managerial discretion arising from the external industry context and internal organizational leadership structure is also examined. The conceptual model is tested in a longitudinal sample of U.S. public companies operating in four industries with differing levels of industry discretion.

An Examination of CEO Tenure Effects on Firm Invention: The Role of Managerial Discretion

Drawing upon upper echelons theory, this research examines the relationship between CEO tenure and innovation. Specifically, we investigated how CEO tenure influences invention in the pharmaceutica...

How Much Does the CEO Matter? The Role of Managerial Discretion in the Setting of CEO Compensation

The idea that managerial discretion—defined as latitude of action—may be an important determinant of CEO compensation has been recognized for some time. However, in spite of considerable work that ...

Do Managers Matter? The Role of Managerial Discretion in Corporate Social Responsibility Decisions

Do Managers Matter? The Role of Managerial Discretion in Corporate Social Responsibility Decisions

The role of managerial discretion in union mergers

Using financial data from the Labor-Management Services Administration, this paper examines the managerial discretion hypothesis of union merger activity. The lack of both union and leadership rivalry leaves no effective mechanism for union members to control their officers, which creates the opportunity for a significant amount of managerial discretion. The analysis supports the expectation that union officers' preferences for organizational size, as well as pecuniary benefits, can be effectively pursued through merger activity.