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Article
Publication date: 25 November 2019

Jon Aarum Andersen

This paper aims to demonstrate the efforts of Hay Youssef and Tang (2019) to reaffirm the importance of managerial discretion is unsuccessful.

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Abstract

Purpose

This paper aims to demonstrate the efforts of Hay Youssef and Tang (2019) to reaffirm the importance of managerial discretion is unsuccessful.

Design/methodology/approach

Theoretical frameworks from traditional and recent literature on the concept of managerial discretion are related to corporate governance scholarship.

Findings

There are in fact no studies on managerial discretion based on explicit theoretical and empirical definitions and thus no studies published which have measured the degrees of managers’ discretion. The conclusion is that the inability to define the notion of managerial discretion is tantamount to the inability to research it.

Practical implications

Research on managerial discretion does not provide any advice to owners and directors of boards on granting top executives a high or a low degree of discretion.

Originality/value

This paper reaffirms the conclusion of Andersen (2017) that corporate governance scholarship will improve if it abandons the concept of managerial discretion.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 23 February 2022

Efstathios Magerakis

This paper examines the role of managerial discretion in the relation between managerial ability on the level of corporate cash.

Abstract

Purpose

This paper examines the role of managerial discretion in the relation between managerial ability on the level of corporate cash.

Design/methodology/approach

Conjoining the upper echelons theory's premises and the theoretical framework of cash holdings, we posit that the managerial ability's effect on cash policy varies with managerial discretion using firm-level data. To test the empirical prediction, we employ a linear regression model with fixed effects with a sample of US listed firms from 1980 to 2016.

Findings

The findings reveal that the positive association between the ability of chief executive officers and corporate cash savings is weakened by firm-level managerial discretion. The results are robust to various additional analyses, namely lagged independent variables regression, reduced form regression and granger causality test. Overall, the findings are generally consistent with the cash holding motives yielding transaction and precautionary demand for money. However, our findings also shed light on whether managerial discretion moderates or exacerbates agency problems related to top executives' cash holding policies.

Originality/value

This work's distinct characteristic is the investigation of the joint effect of managerial talent and discretion on a firm's cash holding, which remains unexplored in the literature.

Details

Management Decision, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0025-1747

Keywords

Book part
Publication date: 12 June 2017

Sarah Jenkins and Rick Delbridge

This study addresses the debate regarding employee discretion and neo-normative forms of control within interactive service work. Discretion is central to core and…

Abstract

This study addresses the debate regarding employee discretion and neo-normative forms of control within interactive service work. Discretion is central to core and long-standing debates within the sociology of work and organizations such as skill, control and job quality. Yet, despite this, the concept of discretion remains underdeveloped. We contend that changes in the nature of work, specifically in the context of interactive service work, require us to revisit classical theorizations of discretion. The paper elaborates the concept of value discretion; defined as the scope for employees to interpret the meaning of the espoused values of their organization. We illustrate how value discretion provides a foundational basis for further forms of task discretion within a customized service call-centre. The study explores the link between neo-normative forms of control and the labour process by elaborating the concept of value discretion to provide new insights into the relationship between managerial control and employee agency within contemporary service labour processes.

Details

Emerging Conceptions of Work, Management and the Labor Market
Type: Book
ISBN: 978-1-78714-459-0

Keywords

Article
Publication date: 30 December 2021

Wilsa Theodore, Rhenald Kasali, Tengku Ezni Balqiah and Lily Sudhartio

This study aims to investigate the relationship between task environment, organizational agility, perceived managerial discretion and strategy implementation on unit performance.

Abstract

Purpose

This study aims to investigate the relationship between task environment, organizational agility, perceived managerial discretion and strategy implementation on unit performance.

Design/methodology/approach

Based on the literature review, a structural model was developed. A 74-item questionnaire was circulated among middle managers in sales and marketing. The data collection method used purposive sampling. A total of 228 valid responses were obtained. This study was conducted in a leading pharmaceutical company in Indonesia. The data were analyzed using structural equation modeling.

Findings

Based on the data analysis, this study shows that task environment and organizational agility act as antecedents of perceived managerial discretion, which drives strategy implementation resulting in unit performance.

Originality/value

Different from previous studies that examined the linkage of inertial forces and discretion, this research scrutinized the effects of organizational agility on perceived managerial discretion and the direct role of perceived managerial discretion on internal strategy implementation.

Details

International Journal of Pharmaceutical and Healthcare Marketing, vol. 16 no. 2
Type: Research Article
ISSN: 1750-6123

Keywords

Book part
Publication date: 19 September 2014

Guoli Chen and Craig Crossland

Financial analysts act as crucial conduits of information between firms and stakeholders. However, comparatively little is known about how these information intermediaries…

Abstract

Financial analysts act as crucial conduits of information between firms and stakeholders. However, comparatively little is known about how these information intermediaries evaluate the believability and importance of corporate disclosures. We argue that a firm’s level of managerial discretion, or latitude of executive action, acts as a cue for financial analysts, which helps them interpret and respond to voluntary management earnings forecasts. Our study provides strong, robust evidence that financial analysts find management forecasts significantly less believable in low-discretion than in high-discretion environments, and therefore tend to be much less responsive to these forecasts. We also show that managerial discretion is especially impactful on analysts’ responses in those circumstances where analysts are typically most uncertain about how to interpret management forecasts.

Book part
Publication date: 25 November 2010

Jaime Ortega

This study provides an empirical analysis of the relationship between job design and the labor-market environment in which firms operate. In particular, I focus on one…

Abstract

This study provides an empirical analysis of the relationship between job design and the labor-market environment in which firms operate. In particular, I focus on one aspect of job design: the extent to which employees have discretion (autonomy) to organize their work. There has been considerable emphasis in the last 20 years on the importance of “high-involvement” work practices, which seek to give employees more decision rights at work. This literature has been concerned with the introduction of work practices such as team work, job rotation, or quality circles, and with the use of performance pay contracts. Within this literature, there are also some studies that focus more particularly on the extent to which employees have job discretion or autonomy. Discretion is an important characteristic of jobs because much of the redesign effort that has been conducted in the last years has aimed at giving employees more power to make decisions at work, and performance gains are largely attributed to these changes.

Details

Advances in the Economic Analysis of Participatory & Labor-Managed Firms
Type: Book
ISBN: 978-0-85724-454-3

Book part
Publication date: 18 September 2006

Brian K. Boyd and Steve Gove

Managerial constraint is a central theme in strategic management research. Although discussed using a variety of labels (including choice and determinism) and theoretical…

Abstract

Managerial constraint is a central theme in strategic management research. Although discussed using a variety of labels (including choice and determinism) and theoretical perspectives (including resource dependence and population ecology), the common question is the degree to which executives have choices or options when making decisions. Two of the most commonly used approaches for discussing constraint are organizational task environments (Dess & Beard, 1984) and managerial discretion (Hambrick & Finkelstein, 1987). These two papers share substantial commonalities in both their theoretical background and operationalization, raising the question of whether discretion and task environment are indeed separate constructs. This chapter reviews both conceptual and methodological issues associated with the use of task environment and discretion. Drawing on a review of published studies and original data analysis, we offer methodological suggestions for future research.

Details

Research Methodology in Strategy and Management
Type: Book
ISBN: 978-0-76231-339-6

Article
Publication date: 30 November 2021

Lokman Tutuncu

This study aims to investigate whether underwriters exercise their allocation discretion to offer favorable discounts to institutional investors.

Abstract

Purpose

This study aims to investigate whether underwriters exercise their allocation discretion to offer favorable discounts to institutional investors.

Design/methodology/approach

The research covers 173 offerings at Borsa Istanbul between 2010 and September 2021. Two hypotheses related to allocation discretion are developed and tested by means of probit, ordinary least squares and two-stage least squares regressions. Heckman selection regressions are used for robustness tests.

Findings

Allocation discretion is catered toward institutional investors who account for more than 56% of all initial allocations adjusted by gross proceeds. Close to 84% of all gross proceeds come from offerings that allocation discretion is exercised. These discretionary offerings are sold with larger price discounts, yet provide lower initial returns, while evidence points to reallocation to retail investors due to weak demand from institutional investors.

Research limitations/implications

Despite using the population of firms in the research period, the sample size is small relative to more developed markets. The research period cannot be extended because allocation discretion is allowed in 2010.

Practical implications

The research highlights the importance of institutional and foreign investors to the equity markets. This issue is relevant due to the ongoing flight of foreign investors from emerging economies and the increasing participation of small investors in the stock markets.

Social implications

The study cautions retail investors against greater (re)allocations by underwriters who may seek to compensate for the loss of their foreign investor base and urges policymakers to regain foreign investors.

Originality/value

To the best of the authors’ knowledge, this is the first research paper to use actual discounts disclosed in the prospectus to test the predictions related to allocation discretion. The study also contributes to the emerging markets literature by documenting allocation practices of the Turkish underwriters for the first time.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 7 September 2020

J. Samuel Baixauli-Soler, Gabriel Lozano-Reina and Gregorio Sánchez-Marín

The purpose of this paper is to analyze the influence of managerial discretion on the effectiveness of say on pay (SOP) as a governance mechanism. This goal covers an…

Abstract

Purpose

The purpose of this paper is to analyze the influence of managerial discretion on the effectiveness of say on pay (SOP) as a governance mechanism. This goal covers an important gap since the issue of how effective SOP is in promoting more aligned compensation has proved somewhat controversial.

Design/methodology/approach

This empirical research opted for a panel methodology for the period 2003–2017, using a sample of large UK listed-companies (specifically, 3,445 firm-year observations). Data were obtained from several sources (Manifest Ltd, BoardEx, Worldscope, Factset Ownership and DataStream).

Findings

Results show that managerial discretion plays an important role in the effectiveness of SOP as a mechanism for increasing aligned CEO compensation. While individual discretion (latitude of objectives) exerts a negative effect, contextual discretion (latitude of action) increases SOP effectiveness. The global effect of managerial discretion is positive when there is high level of both individual and contextual discretion.

Originality/value

This empirical study provides evidence concerning an emerging topic in the literature regarding the impact of SOP as a shareholder activism mechanism of corporate governance on executive compensation. By taking managerial discretion into consideration as a relevant moderating factor, it also offers a better explanation of SOP effectiveness as a governance mechanism.

Details

Management Decision, vol. 59 no. 6
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 1 December 2006

Ian Taylor and Josie Kelly

Seeks to examine how far Michael Lipsky's theory of discretion as it relates to public sector professionals as “street‐level bureaucrats” is still applicable in the light…

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Abstract

Purpose

Seeks to examine how far Michael Lipsky's theory of discretion as it relates to public sector professionals as “street‐level bureaucrats” is still applicable in the light of public sector reform and in particular the introduction of increased managerial control over professionals.

Design/methodology/approach

The main thesis in Lipsky's work, Street‐Level Bureaucracy, that street‐level bureaucrats devise their own rules and procedures to deal with the dilemmas of policy implementation is linked to public sector reform over the past 25 years or so. The article differentiates between three forms of discretion, rule, task and value and assesses the extent to which these different forms of discretion have been compromised by reform. Examples are drawn principally from the literature on school teachers and social workers

Findings

The findings suggest that the rule‐making (hence bureaucratic) capacity of professionals at street‐level is much less influential than before although it is questionable whether or not the greater accountability of professionals to management and clarity of the targets and objectives of organisations delivering public policy has liberated them from the dilemmas of street‐level bureaucracy.

Research limitations/implications

The work has focussed on the UK and in particular on two professions. However, it may be applied to any country which has undergone public sector reform and in particular where “new public management” processes and procedures have been implemented. There is scope for in‐depth studies of a range of occupations, professional and otherwise in the UK and elsewhere.

Practical implications

Policy makers and managers should consider how far the positive aspects of facilitating discretion in the workplace by reducing the need for “rule‐making” to cope with dilemmas have been outweighed by increased levels of bureaucracy and the “de‐skilling” of professionals.

Originality/value

Lipsky's much cited and influential work is evaluated in the light of public sector reform some 25 years since it was published. The three forms of discretion identified offer the scope for their systematic application to the workplace.

Details

International Journal of Public Sector Management, vol. 19 no. 7
Type: Research Article
ISSN: 0951-3558

Keywords

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