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1 – 10 of over 11000Osama F. Atayah, Khakan Najaf, Ravichandran K. Subramaniam and Phaik Nie Chin
This study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian…
Abstract
Purpose
This study aims to investigate the implication of top executives’ number of years of experience (tenure) on corporate risk-taking behaviour and corporate performance in Malaysian corporations.
Design/methodology/approach
To test the hypothesis efficiently, the authors have extracted the data from Bloomberg for 788 listed companies of the Malaysian Stock Exchange. The methodology entails ordinary least squares regressions, quantile regression and dynamic system generalized method of moments model.
Findings
First, the authors show that executive management tenure has a significant negative relationship with corporate risk-taking. It means that the long-tenured executives tend to undertake less risky strategies and decisions. Second, this study reveals that the longer executive management tenure has a positive relationship with corporate performance. Third, the moderating effect of corporate risk-taking with executive tenure (Tenure dummy*Risk) has a negative relationship with the corporate performance by 1%.
Practical implications
It implies that the appointment of experienced executive management contributes towards corporate performance directly. However, experienced management trends take less risk, which eventually results in mitigating the corporate performance. On that basis, the findings are significant in highlighting the usefulness of executive leadership term and offers insights to academics, practitioners and policymakers.
Originality/value
This paper is novel since it is unique in evaluating the executive tenure and the preferences to handle risk strategies and how that impact the firm performance.
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The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain…
Abstract
Purpose
The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain the effect of executives’ tenure on audit pricing. This paper aims to determine, which viewpoint dominates in explaining the relationship between audit pricing and executive tenure phases.
Design/methodology/approach
Using a sample of 11,198 firm-year observations from 2007 to 2016, the authors adopt an ordinary least squares regression model to assess the impact of the middle and long phases of executives’ tenure on audit fees.
Findings
Audit fees are significantly lower when executives enter the middle and long phases of tenure. The reduction in audit fees is greatest as both chief executive officers and chief financial officers enter the long tenure phase. Although audit fees gradually decrease as executive tenure is extended, they start increasing two years before the end of executive tenure. Furthermore, the negative association between the executive tenure phase and audit fees is greater when the executive is appointed externally. Finally, the long phase of executive tenure also mitigates the positive relationship between audit fees and internal control weaknesses.
Research limitations/implications
This study is based on US data. Future research may extend this study to other countries.
Practical implications
The findings are important to firms, practitioners and academicians, particularly, as the length of tenure of top executives has increased in recent years. By documenting that executives’ middle and long tenure phases reduce audit fees, the findings highlight the importance of maintaining executives in the firm. Finally, the findings have implications for investors, policymakers and auditors to identify companies with high audit risk.
Originality/value
This study is the first to document the impact of executives’ middle and long tenure phases on audit fees.
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Ahmed Riahi‐Belkaoui and Ellen L. Pavlik
This study examined the relationship between executive tenure and selected company characteristics for 196 US corporations. Tenure was found to be negatively related to both…
Abstract
This study examined the relationship between executive tenure and selected company characteristics for 196 US corporations. Tenure was found to be negatively related to both unrelated and related diversification strategies, and positively related to firm performance and both types of ownership structure: stock concentration and management stockholdings.
James K. Summers, Timothy P. Munyon, Annette L. Ranft, Gerald R. Ferris and M. Ronald Buckley
Executives exert a pervasive influence on the organizations they lead. As such, scholars have long considered how to calibrate the risks inherent in executive decision making…
Abstract
Executives exert a pervasive influence on the organizations they lead. As such, scholars have long considered how to calibrate the risks inherent in executive decision making, often relying on incentives and compensation to calibrate executive risk behavior. However, there are shortcomings that reduce the efficacy of this approach, largely because incentives and compensation do not alter the work environment itself, which play a significant role influencing executive risk behavior. Consequently, in this chapter, we propose a conceptualization that integrates executive risk-taking with work design, framing three central features of the strategic leader job and work environment that may be manipulated to channel and shape executive risk-taking. Specifically, accountability, discretion, and relationships are proposed as the key higher-order characteristics of the executive work context, and they are examined with respect to optimal calibration in order to maximize both executive performance and well-being, as well as organizational coordination and control. Implications of this conceptualization and directions for future research are discussed.
Joanne Healy Burress and Linda J. Zucca
Although Corporate America has expended great efforts to shrink the gender equity gap at all levels, there is persistent evidence in the financial press that the gap still exists…
Abstract
Although Corporate America has expended great efforts to shrink the gender equity gap at all levels, there is persistent evidence in the financial press that the gap still exists. This study focuses on the gender equity gap in the most highly compensated positions within corporations. Using Standard & Poor’s Compustat ExecuComp database for 1992‐1997, we find that only 3 percent of the most highly compensated executives are female, that these positions are held disproportionately by men, and that female executives are more likely to be clustered in particular industry groups. In a sample matched by job title, company size and industry, male executives earn significantly higher salaries and bonuses, though total compensation is not significantly different. However, these compensation differences may be explained by differences in human capital characteristics such as age and tenure within a particular job title. Thus, the gender equity gap at top executive positions may be due more to a lack of opportunity than to wage discrimination.
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Ailing Pan, Qian Wu and Jingwei Li
This paper aims to study the impact of external fairness of executive compensation on M&A premium, and examine the moderate role of institutional investors. The high M&A premium…
Abstract
Purpose
This paper aims to study the impact of external fairness of executive compensation on M&A premium, and examine the moderate role of institutional investors. The high M&A premium is the main factors that induce the huge impairment of listed companies’ goodwill and the plummeting performance. Executives are the decision-makers of M&As, and their decision-making process is inevitably affected by the psychological factors. In recent years, institutional investors have become an important external force that can affect the governance of listed companies.
Design/Methodology/Approach
The authors use M&A data of listed companies from 2008 to 2018 and use OLS regression to test the relationship between executive compensation fairness and M&A premium.
Findings
The results show that the lower the external fairness of executive compensation, the greater the M&A premium. Institutional investors can effectively reduce the impact of external compensation unfairness on M&A premiums. The mechanism tests show that executives' psychological perception of fairness induced by external unfairness reduces their motivation to work and prompts them to use high premium to seek alternative compensation incentives. Further examinations of executive characteristics and corporate characteristics show that the role of external unfairness in executive compensation in driving M&A premiums is more pronounced in companies with longer executive tenure, weaker executive reputation incentives and private property.
Originality/Value
This paper enriches the research on the pre-factors of M&A premiums from the perspective of executives’ psychological perception of fairness, provides evidence that institutional investors play a positive governance role and provides decision-making references for companies to take corresponding measures to reduce M&A premium risks.
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Barton M. Sharp, Dinesh N. Iyer and Thomas H. Brush
The purpose of this paper is to expand the understanding of the “front end” of innovation by examining the influence of top executives, who allocate the resources and cultivate…
Abstract
Purpose
The purpose of this paper is to expand the understanding of the “front end” of innovation by examining the influence of top executives, who allocate the resources and cultivate the culture in which inventions are born, on the innovation process.
Design/methodology/approach
This paper suggests that the effect of executives on innovation can be better understood by explicitly separating innovation into the component processes of invention and commercialization. This allows us to consider how executive characteristics might have a different effect on technology development outcomes than they do on the subsequent transformation of those technologies into new products. The theory is tested on a sample of firms from the biomedical device industry.
Findings
The findings indicate that top management team (TMT) age and tenure have no effect on the type of technologies a firm develops (radical vs incremental) but do significantly affect the efficiency with which new technologies are turned into new products in some contexts. TMT heterogeneity affects both the type of technologies developed in the firm and also their transformation to new products. Interestingly, the effect of executives on commercialization depends on the type of underlying technologies which the firm has developed.
Originality/value
This paper contributes to the literatures on TMTs and innovation by offering a more granular explanation of how executives differentially impact the disaggregated stages of the innovation process, and thus also contributes to knowledge of the long-term innovation performance implications of executive leadership.
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The gender diversity of top management teams (TMTs) is slowly increasing. Research shows that top executives influence firms through their role in strategic decision-making but…
Abstract
Purpose
The gender diversity of top management teams (TMTs) is slowly increasing. Research shows that top executives influence firms through their role in strategic decision-making but that executives are not equally engaged in it. The purpose of this paper is to understand whether gender affects the likelihood of inclusion in strategic decision-making.
Design/methodology/approach
Drawing on surveys completed by chief executive officers (CEOs) and using expectation states and gender roles theories, the author examines the relationship between gender and inclusion in strategic decision-making for 266 top executives of global public firms.
Findings
After controlling for a myriad of factors, results indicate that female executives are less likely than male executives to be included in strategic decision-making. Firm tenure moderates this effect such that it leads to a greater likelihood of inclusion for female executives but not male executives.
Originality/value
This study provides a unique consideration of strategic decision-making in TMTs. The findings suggest that diversity and inclusion do not always go hand in hand and that female executives may need to prove themselves more than male executives to be given an equal voice in the strategic direction of the firm.
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Wein-Hong Chen, Min-Ping Kang and Bella Butler
Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated premise…
Abstract
Purpose
Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated premise in Penrose’s growth theory. The purpose of this paper is to empirically re-examine the Penrose effect from the perspective of upper echelons theory and investigated how top management team (TMT) composition influences the continual growth of a firm.
Design/methodology/approach
This study empirically tested the hypotheses based on a sample of listed manufacturing firms operating in Taiwan, a newly industrialized economy in the Asia–Pacific region. Moderated hierarchical regression analyses were applied to test hypotheses.
Findings
The empirical results suggest that low TMT diversity (in terms of educational, functional and team tenure diversity) is likely to engender a situation in which the Penrose effect might occur. Additionally, the results indicate that the proportion of functional executives plays a significant role in influencing the growth trend over two consecutive periods and may soften the impact of the Penrose effect.
Practical implications
This paper suggests that appropriate structuring of TMTs and appropriate management of their members’ backgrounds and team tenure diversity can help firms overcome the Penrose effect and grow continually. Furthermore, the proportion of functional executives in a TMT is influential.
Originality/value
This paper uniquely contributes to the theoretical and empirical development of Penrose’s growth theory, upper echelons theory and resource-based view concerning managerial resources.
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Fariss T. Mousa, Sang Kyun Kim and Matthew A. Rutherford
The purpose of this paper is to explore the role of the top management team (TMT) in determining whether IPO firms in high-tech industry will engage in acquisitions during the…
Abstract
Purpose
The purpose of this paper is to explore the role of the top management team (TMT) in determining whether IPO firms in high-tech industry will engage in acquisitions during the post-IPO period.
Design/methodology/approach
The authors collect IPO and TMT data from firm prospectuses, and acquisition and financial data from Securities Data Company Platinum and Compustat, respectively. Poisson regression analysis is applied to test the effect of TMT characteristics on acquisition activity.
Findings
Using 135 IPO firms, the authors find evidence that TMT composition directly influences acquisition activity of IPO firms during the post-IPO period. Specifically, the authors find that TMT experience serving as members other firms’ boards and TMT experience in senior level management positions are both positively associated with acquisition activity. TMTs with prior IPO experience and TMTs with longer organizational tenures are negatively associated with acquisition activity.
Originality/value
This study is among the first to examine the impact of TMT demography on newly public firms’ acquisition activity. In doing so, it adds meaningfully to the understanding of the factors driving such firms’ strategic behavior.
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