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Article
Publication date: 15 October 2016

Martin Plöckinger, Ewald Aschauer, Martin R.W. Hiebl and Roman Rohatschek

In recent years, numerous studies have investigated whether individual executives and their characteristics relate to financial reporting choices. In this article, we…

Abstract

In recent years, numerous studies have investigated whether individual executives and their characteristics relate to financial reporting choices. In this article, we review archival, experimental and survey research on the influence of individual executives on corporate financial reporting and use upper echelons theory as our organizing framework. Our review of 60 studies shows that research consistently finds that top management executives exert significant influence on financial reporting decisions, particularly on disclosure quality. Empirical research has developed promising approaches to investigate executives' psychological attributes and character traits. The results of studies examining the influence of demographic characteristics of individual executives are, however, sometimes contradictory and ambiguous. Nevertheless, the overall empirical results we review are supportive of upper echelons predictions. Additional research in this field is needed to clarify the influence of unexamined upper echelon characteristics, important moderator variables, and adverse selection effects. We also suggest that future research more closely investigates the magnitudes of managerial influence and adopts a more holistic perspective on financial reporting outcomes.

Article
Publication date: 10 July 2017

Martin R.W. Hiebl

Informed by upper echelons theory, the purpose of this paper is to synthesize the current knowledge on finance managers in family firms and to suggest valuable future…

Abstract

Purpose

Informed by upper echelons theory, the purpose of this paper is to synthesize the current knowledge on finance managers in family firms and to suggest valuable future research avenues.

Design/methodology/approach

The paper is organized as a theory-informed literature review. Based on a keyword search in electronic databases, 17 journal articles that deal with finance managers in family firms were identified. In light of upper echelons theory, the results of these articles were analyzed and future research needs were identified.

Findings

Overall, the current knowledge on finance managers in family firms is scant and fragmented. At the same time, this paper’s review findings indicate that finance managers can play decisive roles in family firms, which is why we need further research on their roles. Upper echelons theory is suggested in this paper as a theoretical framework that is well suited to guide such further research.

Originality/value

This is the first review of the academic literature on finance managers in family firms. Its main value lies in providing a theory-informed synthesis of current research on this topic and highlighting fruitful future research avenues.

Details

Journal of Family Business Management, vol. 7 no. 2
Type: Research Article
ISSN: 2043-6238

Keywords

Book part
Publication date: 29 August 2005

Albert A. Cannella and Tim R. Holcomb

The upper-echelons model of Hambrick and Mason ((1984). Academy of Management Review, 9, 193–206) launched a new area of research and provided the first overall…

Abstract

The upper-echelons model of Hambrick and Mason ((1984). Academy of Management Review, 9, 193–206) launched a new area of research and provided the first overall theoretical framework for use in understanding how the experiences, backgrounds, and values of senior executives in organizations can influence the decisions that they make. The model is typically assumed to be what Rousseau ((1985). In: B. M. Staw, & L. L. Cumming (Eds), Research in organizational behavior (Vol. 7, pp. 1–37). Greenwich, CT: JAI Press) calls “multi-level,” as it describes how both individuals and top management teams (TMTs) make decisions in line with their preferences, biases, and values; the same model is applicable to both individuals and groups. However, the levels issues in the model have never been subjected to rigorous analysis. This chapter juxtaposes levels concepts and theories on the upper-echelons model, in an effort to highlight its strengths as well as its weaknesses. While the majority of researchers use the model to describe team-level decision making, the analysis presented here reveals that the model is inherently individual-level in focus, and several important limitations must be overcome before the model will provide a full explanation of team-level decision making.

Details

Multi-Level Issues in Strategy and Methods
Type: Book
ISBN: 978-1-84950-330-3

Article
Publication date: 25 June 2018

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…

1523

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.

Details

Management Decision, vol. 57 no. 1
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 5 March 2018

Won Seok Lee, Choongbeom Choi and Joonho Moon

This study aims to investigate how upper echelon theory accounts for franchising by selecting the top management team to proxy for the upper echelon and using age, tenure…

Abstract

Purpose

This study aims to investigate how upper echelon theory accounts for franchising by selecting the top management team to proxy for the upper echelon and using age, tenure, education, equity ownership and stock options as its main attributes.

Design/methodology/approach

The sample was drawn from the Execucomp and Compustat databases and from other publicly accessible resources (e.g. LinkedIn and Business Week, in addition to Annual 10-K reports). A total of 29 restaurant companies were used for data collection, which covered the period of 2000-2013. A panel feasible generalized least squares (FGLS) regression was used to analyze the data.

Findings

The study found a significant moderating effect of the degree of internationalization on the relation between the attributes of the upper echelon (e.g. tenure, education and share ownership) and franchising decisions.

Research limitations/implications

The results verified that top managers in the restaurant industry with more tenure and share ownership become more risk averse when they operate under riskier conditions, whereas highly educated restaurant top management teams tend to take more risks in strategic decision-making.

Originality/value

This study expanded internationalization research to upper echelon theory and into the arena of franchising.

Details

International Journal of Culture, Tourism and Hospitality Research, vol. 12 no. 1
Type: Research Article
ISSN: 1750-6182

Keywords

Article
Publication date: 8 June 2015

Fabian Hattke and Steffen Blaschke

The purpose of this paper is to evaluate the influence of top management team diversity on academic excellence in universities. Academic excellence is conceptualized as…

1176

Abstract

Purpose

The purpose of this paper is to evaluate the influence of top management team diversity on academic excellence in universities. Academic excellence is conceptualized as successfully gaining funds for inter-organizational research collaborations, interdisciplinary graduate schools and high-ranked scientific reputation.

Design/methodology/approach

The study applies upper echelon theory to universities. Three hypotheses are developed: (overall) top management team heterogeneity is positively associated with successful funding of excellence clusters, (overall) top management team heterogeneity is positively associated with successful funding of graduate schools and (overall) top management team heterogeneity is positively associated with academic reputation. The empirical study is based on a cross-sectional dataset with a time lag, covering characteristics of 75 German public universities from 2008 to 2013. Multiple-regression analysis is applied to test the hypotheses.

Findings

Our results indicate that disciplinary and educational diversity of upper echelons has a positive effect on the outcomes. Other top management team characteristics (age, gender, etc.) show no significant effects. Besides top management team composition, we find that a high number of faculties and a broad inclusion of internal status groups (students, tenured faculty, academic and administrative staff) and external stakeholders in decision making processes may enhance academic excellence of universities.

Research limitations/implications

First, the study contributes to the body of literature concerned with higher education. It is situated at the crossroads of management studies and higher education research, unlocking strategic management theorizing for the public context. Furthermore, the study contributes to the body of literature on strategic leadership in pluralistic organizations. It highlights the importance of heterogeneous governance structures and modular organization designs for achieving academic excellence.

Practical implications

The paper may inform practitioners in administrative or leading positions and policy-makers concerned with higher education. The more diverse a top management team is in terms of multiple disciplinary backgrounds, the more likely they succeed in driving the university toward academic excellence.

Originality/value

The study is among the first to evaluate the influence of top management teams in universities with a quantitative research design.

Details

Team Performance Management: An International Journal, vol. 21 no. 3/4
Type: Research Article
ISSN: 1352-7592

Keywords

Article
Publication date: 10 May 2019

Junli Yu, Shelagh M.R. Campbell, Jing Li and Zhou Zhang

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is…

Abstract

Purpose

The Chief Financial Officer (CFO), despite being a critical organization member responsible for ensuring quality of financial reporting, audit and compliance, is under-researched. Grouped as a member of top management teams (TMS) in studies, factors influencing decision making in this group rely on static measures of characteristics without regard for dynamic and longitudinal influences of career trajectories and industry occupational group memberships. The relationship between the high-tech industry as a site of notable reported internal control (IC) weakness and influences on CFOs requires closer examination. The paper aims to discuss these issues.

Design/methodology/approach

The study draws together the upper echelons theory and occupational communities (OCs) to explore the impact of shared values and behavioral norms from different sources on executive decision making. Internal and external sources of OC are proposed and their influence on activities with respect to corporate IC is tested. The sample of 1,573 firm/year observations includes high-tech firms listed on major US exchanges was developed using data from five distinct databases. Executives’ biographic information was manually collected.

Findings

Results indicate that senior financial executives belong not only to their firm and its culture but also to OCs that extend beyond the firm. Membership in professional credential granting occupational groups has less impact on effective IC than experience in the high-tech industry. In combination, multiple OCs show evidence of compound and counteracting effects on IC. The OC that arises in the high-tech industry makes a measurable positive difference in the quality of IC in sample firms, in contrast with the OC among credentialed accounting and financial professionals.

Research limitations/implications

This quantitative study of OC reveals the differential impact of different sources of OC and contributes to the literature on TMS a new framework for examining decision making. OC is typically studied through qualitative methods and, thus, potential exists to further explore the specific nature and dynamics of the OCs identified in this study.

Practical implications

The study highlights the role of broad affiliations and networks among senior financial executives which may have bearing on their ability to effectively manage IC. The role of these networks may also partially explain instances of CFO failure and thus dismissal. Knowledge of the role of OC may help boards of directors in the selection and promotion of senior financial officers of the firm.

Originality/value

The paper offers a different perspective on professional accounting expertise in one specific industry where incidence of IC weakness is high relative to other industries. Study results expand recent research on TMS to include sociological impacts of cohort groups. Despite generally weaker IC in the high-tech sector, this study demonstrates the value of exploring group membership within the industry as an important predictor of behavior. The result is a new perspective to CFO decision making which illustrates the relevance of OCs among upper echelons. The implications of findings for CFO recruitment and promotion are borne out in recent instances of senior financial executive failure in the sector.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

Book part
Publication date: 29 August 2005

Albert A. Cannella and Tim R. Holcomb

We thank Carpenter and Dalton and Dalton for their insights on our earlier chapter, and on the promise (and perils) of upper-echelons research in general. We set out to…

Abstract

We thank Carpenter and Dalton and Dalton for their insights on our earlier chapter, and on the promise (and perils) of upper-echelons research in general. We set out to closely examine the levels issues in Hambrick and Mason's ((1984). Academy of Management Review, 9, 193–206.) original upper-echelons model, and the research initiatives that have applied this theoretical framework. We are encouraged by the initial reception that we have received from these authors. We continue to believe that top management teams (TMTs) are an important level of analysis for strategic leadership research, though the original upper-echelons model proposed by Hambrick and Mason cannot be directly applied at the team level. Our reply highlights several joint and individual concerns raised by the articles. We close by reiterating our call for continued analysis of the upper-echelons model.

Details

Multi-Level Issues in Strategy and Methods
Type: Book
ISBN: 978-1-84950-330-3

Open Access
Article
Publication date: 31 October 2022

Raghdaa Ali Ismail, Osama Zaki and Heba Abou-El-Sood

This paper aims to provide a systematic review of literature pertaining to how executive behavioral characteristics relate to financial reporting decisions.

Abstract

Purpose

This paper aims to provide a systematic review of literature pertaining to how executive behavioral characteristics relate to financial reporting decisions.

Design/methodology/approach

The authors review 44 papers published between 2001 and 2021 in top journals that are nested in leading business, economic and accounting journals.

Findings

Through the systematic review, the authors provide a framework for the emergence of narcissism and how it relates to decision making and hence, firm performance. Additionally, this paper identifies different measures of measuring narcissism with their pros and cons and suggest that different measures lead to different outcomes in prior literature.

Originality/value

The study contributes to a growing stream of research on executives' attributes influence on decision making. The authors recommend that future research may focus more on the chief financial officer (CFO) role as the majority of literature in CEO based. Additionally, the authors suggest that different settings may moderate the outcomes, and the authors propose that future research may be conducted to show how the regulatory environment affects or moderates narcissism effect.

Details

Journal of Humanities and Applied Social Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2632-279X

Keywords

Book part
Publication date: 27 June 2013

David A. Waldman and Mansour Javidan

The primary purpose of this chapter is to examine some old truths about leadership at the CEO level, and to summarize a new perspective based on charismatic leadership…

Abstract

The primary purpose of this chapter is to examine some old truths about leadership at the CEO level, and to summarize a new perspective based on charismatic leadership theory that could help cast light on this important area of strategic management. In so doing, we attempt to move charismatic leadership theory in some new directions by bridging micro-and macro-level conceptualizations. The upper echelons perspective from the strategic management literature is first summarized. We then identify problems in conceptualization and measurement that have served to limit the usefulness of this theoretical approach with regard to understanding the leadership role and effects of CEOs. We present two alternative new models that incorporate the constructs of strategic change, CEO charisma, and perceived environmental uncertainty. Data are also presented, suggesting mixed support for the models. Suggestions are made with regard to future quantitative and qualitative research.

Details

Transformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition
Type: Book
ISBN: 978-1-78190-600-2

1 – 10 of over 3000