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Article
Publication date: 13 May 2014

Jason W. Ridge, Dave Kern and Margaret A. White

The purpose of this paper is to examine the effects of temporal myopia (focussing on the short-term) and spatial myopia (focussing on the current market) on firm strategy…

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Abstract

Purpose

The purpose of this paper is to examine the effects of temporal myopia (focussing on the short-term) and spatial myopia (focussing on the current market) on firm strategy. Specifically the paper investigates the effects of temporal and spatial myopia on the persistence and conformity of firm strategy. Additionally, the paper tests how environmental munificence moderates these effects. A secondary purpose of this paper is to develop a replicable method of measurement of temporal and spatial myopia.

Design/methodology/approach

The authors conducted a manual content analysis of letters to shareholders for 100 firms over three years to measure spatial and temporal myopia. After collecting strategy variables and control variables from Compustat, the authors utilize a random-effects panel methodology.

Findings

The results indicate that strategy is influenced by both temporal and spatial myopia. Specifically, temporal myopia creates a focus on the firm's current strategy, leading to a persistent strategy over time and spatial myopia focusses firm decision makers on better known technologies and competitors, leading to conformity to industry strategic profiles. Additionally, the paper tests how environmental munificence influences these relationships. In total, the paper finds that the differing types of managerial myopia have distinct influences on firm outcomes.

Originality/value

This paper makes two important contributions to the literature on managerial myopia. First, the paper investigates the differential effects of both spatial and temporal myopia on firm strategy, topics that have been relatively overlooked in empirical investigations of decision making. Second, the paper develops replicable measures for both temporal and spatial myopia, which have been previously suggested to limit the ability to empirically test the implications of managerial myopia (Laverty, 1996).

Details

Management Decision, vol. 52 no. 3
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 1 January 2014

Moren Levesque, Phillip Phan, Steven Raymar and Maya Waisman

We study the events that motivate CEOs to underinvest in R&D long-term projects (CEO myopia). Based on the existing literature in earnings management and agency theory…

Abstract

We study the events that motivate CEOs to underinvest in R&D long-term projects (CEO myopia). Based on the existing literature in earnings management and agency theory, myopia is likely to become more problematic under five circumstances: when the CEO nears retirement (the CEO horizon problem), R&D projects have very long time horizons (the project horizon problem), the firm’s financial health is deteriorating (the cover-up problem), ownership structure is heavily weighted toward insider owners (minority owner oppression problem), and when the threat of hostile takeover increases (the entrenchment problem). We setup a dynamic simulation model in which rational CEOs maximize the total value of their bonus compensation over their tenure. Our findings related to the five circumstances are consistent with the extant literature. However, we found an unexpected stable, nonlinear (inverted U-shaped) relationship between CEO tenure and R&D investment. We discuss the theoretical implications of our model and offer suggestions for future research.

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Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

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Article
Publication date: 16 June 2021

Hadi Saeidi

This study aims to investigate the impacts of the psychological behaviors of managers, including entrenchment, myopia, narcissism and overconfidence, on money laundering…

Abstract

Purpose

This study aims to investigate the impacts of the psychological behaviors of managers, including entrenchment, myopia, narcissism and overconfidence, on money laundering at Iranian companies listed on the Tehran Stock Exchange.

Design/methodology/approach

The present study is descriptive-correlational in terms of methodology and applied research in terms of objectives. The statistical population consisted of all companies listed on the Tehran Stock Exchange during 2013–2019. A total of 150 companies were selected as samples via screening. Logistic regression was used to analyze the data and test the hypotheses in EViews v10.

Findings

The findings revealed that management entrenchment, managerial myopia, managerial narcissism and managerial overconfidence have significant impacts on money laundering.

Originality/value

This study pioneer investigating the impacts of psychological behaviors among managers on money laundering in Iran. As an economic crime, money laundering poses an adverse impact on economic growth in countries. The continuous monitoring of manager performance and the deployment of performance measurement systems could prevent the negative impacts of manager behavior on money laundering.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 29 April 2021

Mahdi Salehi, Arash Arianpoor and Nader Naghshbandi

The main objective of the paper is to examine the relationship between managerial attributes (e.g. managerial entrenchment, managerial myopia and managerial…

Abstract

Purpose

The main objective of the paper is to examine the relationship between managerial attributes (e.g. managerial entrenchment, managerial myopia and managerial overconfidence) and firm risk-taking on the Tehran Stock Exchange (TSE).

Design/methodology/approach

The study’s sample comprises 150 companies listed on the TSE from 2011 to 2017. Risk-taking is calculated as the standard deviation (SD) of stock return. Explanatory factor analysis was performed to calculate the weight of each of the five variables managerial ownership, board independence, chief executive officer (CEO) tenure, board compensation and CEO duality as a proxy for managerial entrenchment. The study by Anderson and Hsiao (1982) was also used to calculate managerial myopia, and the study by Schrand and Zechman (2012) was used to calculate managerial overconfidence.

Findings

The results indicate that the effect of managerial entrenchment and managerial myopia on risk-taking of listed firms on the TSE is positive and significant, implying that an increase in CEO entrenchment is likely to give rise to risk-taking. The authors conjecture that this finding could be due to the investment projects impairing the firm performance in the long run. Furthermore, the effect of managerial overconfidence on listed firms' risk-taking on the TSE is significantly negative. Since overconfidence is one of the traits of narcissism and corporate managers tend to be encouraged and admired, it is implied that they tend to make efficient and low-risk investments that ultimately reduce the firm risk-taking.

Originality/value

Several theoretical studies show that managerial behavior is a determining factor in the economy. One of the reasons which justify the originality of this study is the context and institutional environment. Undoubtedly, managerial behavior (e.g. managerial entrenchment, managerial myopia and managerial overconfidence) is expected to have some significant variations in developing countries compared to prevailing in developed countries, particularly in the Iranian stock market the economic sanctions. Furthermore, due to the direct impact of individuals' psychological and behavioral characteristics on their decisions and the effect of companies' risk-taking on increasing and decreasing shareholders and companies' wealth, this research is essential. Given the function of designed behavioral criteria for assessing risk-taking behaviors, the relationship between managerial attributes and firms' risk-taking is still unclear and investigated in this study.

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The TQM Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-2731

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Article
Publication date: 1 March 1993

Michael D. Richard, James A. Womack and Arthur W. Allaway

Outlines the foundations and dimensions of marketing myopia andproposes a two‐dimensional classification of its several types. Presentsan integrated analysis which is…

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Abstract

Outlines the foundations and dimensions of marketing myopia and proposes a two‐dimensional classification of its several types. Presents an integrated analysis which is intended to enrich, rather than replace, the existing explanations and to clarify and reinforce a caveat proposed 30 years ago. Makes a recommendation for seeking innovative marketing strategies which are designed to remove some of the myopia‐caused restrictions on the range of strategic options.

Details

Journal of Product & Brand Management, vol. 2 no. 3
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 1 March 1992

Michael D. Richard, James A. Womack and Arthur W. Allaway

Examines the concept of marketing myopia, its differentexplanations and types. Organizes the four types of marketing myopiainto a classification scheme, suggesting a new…

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1082

Abstract

Examines the concept of marketing myopia, its different explanations and types. Organizes the four types of marketing myopia into a classification scheme, suggesting a new perspective which can produce innovative marketing strategies. Recommends five steps towards becoming an innovative firm: a generic firm/industry view, other‐industry monitoring, benchmarking, recruitment of marketers, and a flexible approach to problems.

Details

Journal of Consumer Marketing, vol. 9 no. 3
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 1 January 2013

Terhi Chakhovich

One stream of research has claimed share price to be long‐term oriented, whereas, in contrast, another has found it to be short‐term oriented. Through in‐depth analysis…

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2105

Abstract

Purpose

One stream of research has claimed share price to be long‐term oriented, whereas, in contrast, another has found it to be short‐term oriented. Through in‐depth analysis, this study aims to reveal the grounds for each of these two claims by studying the time‐related constructs of two parties: executives of a company and outsider commentators of that company.

Design/methodology/approach

The study employs a social constructionist approach and incorporates the sociology of time in the analysis of case data focused on a publicly quoted company. Data drawn from outsider commentators provide additional focus.

Findings

The executives studied in the publicly‐quoted company construct share price as long‐term oriented through three processes: linguistic, practice‐oriented functional, and morality‐related functional. However, these executives construct time through a present‐based rationality, which means that effective and efficient present actions are assumed to form the basis for a successful future. Outsider commentators indicate two myopia‐related risks in this rationality: current, present day pressing issues are not deliberated upon in a wider framework of long‐term plans, and it is not possible to relinquish the present and focus only on the future, free from present concerns. The long‐term orientation of share price is constructed by executives as instrumental through processes that are tied to the present‐based rationality with its myopia‐related risks.

Research limitations/implications

By showing the long and short time orientations of share price, the paper provides grounds for a subsequent analysis of the origins of these orientations within the minds of actors.

Practical implications

The study provides guidance on avoiding myopia when using share price‐related compensation systems.

Originality/value

The study contributes to the performance measurement and corporate governance literatures by analysing, for the first time, share price from the perspective of executives themselves. In addition, the views of outsider commentators are considered.

Details

Accounting, Auditing & Accountability Journal, vol. 26 no. 1
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 17 October 2018

Rose Opengart, Peter M. Ralston and Steve LeMay

The purpose of this paper is to extend the concept of myopia and introduce the concept of labor market myopia (LMM), as well as the role that human resources management…

Abstract

Purpose

The purpose of this paper is to extend the concept of myopia and introduce the concept of labor market myopia (LMM), as well as the role that human resources management (HRM) plays in its prevention and resolution. LMM, a more specific form of factor market myopia (FMM), is a myopic view of labor needs. LMM is only going to increase as human capital becomes increasingly scarce due to labor shortages.

Design/methodology/approach

This conceptual review focuses on research on factor market rivalry (FMR) in the supply chain. Using three sample job categories, the concept of myopia is applied toward the human resources context to propose a new term describing a failure to consider future labor needs.

Findings

The authors position HRM/talent management as critical in preventing and addressing LMM at both firm and industry levels and the critical role of labor markets in FMR. HR strategies are suggested to prevent LMM include: expansion of the available workforce; increasing current workforce productivity, economic remedies like paying higher wages and proactively assessing and forecasting the current and future human resource capacity and needs.

Practical implications

Labor needs to be considered as a factor in the same realm of importance as other resources. The HR strategies discussed are key to preventing LMM and improving organizational performance and effectiveness.

Originality/value

The authors argue that organizations not only compete for resources downstream (i.e. customers and markets) but also upstream, such as with human resources. The authors introduced a new concept/term to frame the effect on organizations when supply chain planning and HR strategy do not take labor into consideration. This was accomplished by first narrowing the concept of marketing myopia to FMM, and in this conceptual paper, it was subsequently narrowed to introduce the term LMM.

Details

Journal of Organizational Effectiveness: People and Performance, vol. 5 no. 4
Type: Research Article
ISSN: 2051-6614

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Article
Publication date: 23 November 2020

Roya Izi, Mansour Garkaz, Parviz Sayeedi and Alireza Matoufi

The purpose of this research paper is to provide a model for reporting quality of financial information based on behavior of listed companies in Tehran Stock Exchange…

Abstract

Purpose

The purpose of this research paper is to provide a model for reporting quality of financial information based on behavior of listed companies in Tehran Stock Exchange which is based on structural equation modeling approaches.

Design/methodology/approach

This study uses applied research and postsemi experimental method of data collection in the field of proofing accounting research with deductive–inductive approach. The statistical population of this study includes the sample of 128 listed companies in the Tehran Stock Exchange between 2007 and 2017. The behavioral characteristics of managers (hidden variables) are measured by observable variables of myopia, opportunistic behavior and overconfidence of managers. Reporting quality of financial information is also investigated based on the scores accrued to each company and the announcement published by the Tehran Stock Exchange based on the companies' rating in terms of the quality of reporting and proper notification.

Findings

After insuring the acceptable fitness of the measurement pattern and the structure of research in both approaches, structural equations modeling and regression, the results indicate that there is a significant negative relationship between the behavioral characteristics of managers and the reporting quality of financial information.

Originality/value

Accountants have a critical and difficult responsibility of dealing with transactions and presenting them in the form of financial reports that can be used by interest groups to assess the performance of companies. This critical responsibility becomes meaningful when professional and ethical behaviors are the basis for disclosure of financial reporting. Based on the behavioral characteristics of disclosing financial reporting in emerging capital markets such as Iran, this study can be successful in developing new and theoretical literature in this field.

Details

Journal of Management Development, vol. 39 no. 9/10
Type: Research Article
ISSN: 0262-1711

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Article
Publication date: 22 July 2020

Maryam Seifzadeh, Mahdi Salehi, Bizhan Abedini and Mohammad Hossien Ranjbar

The present study attempts to assess the relationship between management characteristics (managerial entrenchment, CEO narcissism and overconfidence, managers' myopia

Abstract

Purpose

The present study attempts to assess the relationship between management characteristics (managerial entrenchment, CEO narcissism and overconfidence, managers' myopia, real and accrual-based earnings management) and financial statement readability of listed firms on the Tehran Stock Exchange. In other words, this paper seeks to answer the question that “whether management characteristics have a favorable effect on financial statement readability or not.”

Design/methodology/approach

Multivariate regression model is used to meet the purpose of this study and research hypotheses are also examined using a sample of 1,050 listed observations on the Tehran Stock Exchange during 2012–2017 and by employing multiple regression patterns based on panel data technique and fixed effects model. Moreover, exploratory factor analysis of six variables (tenure, board independence, CEO duality, CEO ownership, board compensation and CEO change) is used for calculating managerial entrenchment and the FGO index is used for measuring readability.

Findings

The obtained results show that there is a negative and significant relationship between managerial entrenchment and accrual-based earnings management and a positive and significant relationship between real earnings management, managers' myopia, managers' narcissism and overconfidence and financial statement readability.

Originality/value

Since the present study is the first paper to investigate such a topic in the emerging markets, it provides useful information about intrinsic and acquisitive characteristics of management for accounting information users, analysts and legal institutions that contribute greatly to financial statement readability. Besides, the results of this study aid the development of science and knowledge in this field and fill the existing gap in the literature.

Details

EuroMed Journal of Business, vol. 16 no. 1
Type: Research Article
ISSN: 1450-2194

Keywords

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