Measuring industry managerial discretion: a comparative study in the UK

Abstract

Purpose

The theory of managerial discretion and the direct insights it provides in the understanding of the varying impact strategic and operational actions have on organizational change and business fortunes is an area of research potential underexplored in the UK. This study aims to establish whether the measurement of managerial discretion is constant between the two similar societal corporate frameworks of the UK and the USA listed markets.

Design/methodology/approach

The extant managerial discretion ranking model, established in the USA, is empirically assessed for its validity and effectiveness across a sample of high- and low-discretion companies from the FTSE 350.

Findings

Using accounting measures, a clear and significant difference is established between UK high and low managerial discretion entities. The results prove to be significant in enabling the differential comparative analysis of the institutional characteristics of corporates.

Originality/value

To the best of the authors’ knowledge, no study of this nature has been conducted previously in the UK context. While the original model developed in the USA is now several decades old, the UK results reflect similar industry rankings as found originally in the USA, subject to some differences considered to be a result of the changing nature of global business since the 1990s. This study opens a new seam of novel research, which has the potential to uncover, at a granular level, the differential mores and character of management ethics, styles and practices in such issues as organizational change, corporate culture, governance and social responsibility.

Citation

Iyiola, B. and Trafford, R. (2024), "Measuring industry managerial discretion: a comparative study in the UK", Journal of Accounting & Organizational Change, Vol. 20 No. 2, pp. 228-247. https://doi.org/10.1108/JAOC-08-2021-0104