Do Competent Managers Hoard Bad News? Self-regulation Theory and Korean Evidence

Lee, Sang-Ho; Lee, Sejoong; Ryu, Ji Yeon

doi:10.1016/j.frl.2020.101836

Cited by 5 publications

(4 citation statements)

References 28 publications

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“…Although firms weigh costs versus benefits in holding cash (Opler et al, 1999), the benefits of cash holdings can be mitigated by agency problems, where managers may use a cash buffer to serve private interests (M. C. Jensen & Meckling, 1976). The “dark side” of managerial ability links CEOs to a higher possibility of stock price crash risk attributable to investment inefficiency (Habib & Hasan, 2017), unethical behavior resulting from bad news hoarding (S. Lee et al, 2021), higher agency costs (Mishra, 2014), and opportunistic financial reporting (Gul et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Environmental uncertainty and corporate cash holdings: The moderating role of CEO ability

Magerakis

Habib

2021

Int Rev Finance

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This article empirically tests the association between environmental uncertainty and corporate cash holdings and whether CEO ability moderates this association. Based on the precautionary motive for holding cash, we predict that firms will hold more cash when operating in an environment of high uncertainty. To test this prediction, we utilize a panel of non-financial U.S. firms throughout 1980-2016.Using the coefficient of variation in sales as a proxy for environmental uncertainty, we find that environmental uncertainty increases firm cash holding. We then explore the moderating role of CEO ability and find that more-able CEOs weaken the positive association between environmental uncertainty and cash holding. Further, the results demonstrate that small-sized, financially sound, and low leveraged firms are likely to hoard more cash during periods of heightened uncertainty. Our study provides new insights for investors, shareholders, and policymakers into companies' decision-making concerning liquid assets.

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Section: Introductionmentioning

confidence: 99%

Environmental uncertainty and corporate cash holdings: The moderating role of CEO ability

Magerakis

Habib

2021

Int Rev Finance

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“…According to signaling theory, firms or governments disclose information to the outside world, which conveys information to investors, who make decisions based on the information (Karasek & Bryant, 2012;Taj, 2016). Based on bad news hiding theory, corporate managers have an incentive to release positive information, hide negative news, or delay the disclosure of negative news (F. Jiang et al, 2020;Lee et al, 2021). As suggested in stakeholder theory, the attention of external stakeholders to the firm has an impact on the value of the firm (Freeman et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…Based on bad news hiding theory, corporate managers have an incentive to release positive information, hide negative news, or delay the disclosure of negative news (F. Jiang et al, 2020; Lee et al, 2021). As suggested in stakeholder theory, the attention of external stakeholders to the firm has an impact on the value of the firm (Freeman et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Firm-Specific Environmental Punishment on Stock Price Crash Risk: Evidence From China

Li,

Shen,

Wen

2023

Sage Open

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Even though previous studies have investigated the effect of environmental regulation policy on stock price crash risk, little is known about how the firm-specific environmental punishment would impact stock price crash risks. By applying difference-in-difference method with manually collected firm-specific environmental punishment data for the listed firms in China, our study finds that the implemented environmental punishment leads to larger stock price crash risk accumulation of the punished firms. This effect can be mitigated by better information disclosure behavior, higher media reputation, healthy fundamentals, and optimal capital structure. Our study also finds the consecutive punishment effect only exists in a long period. Our work is among the first to rigorously analyze the effect of firm-specific environmental punishment on firm’s stock price crash risk. This research provides relevant policy suggestions on the environmental punishment practice.

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“…Además, las habilidades gerenciales son un vehículo de transferencia de destrezas, a través del cual el talento humano gerencial, plantea acciones estratégicas y pone en prácticas las herramientas administrativas para el éxito de la empresa . Por esta razón, el gerente debe estar provisto de las competencias (Gao et al, 2022;Sun et al, 2019), habilidades, disciplinas y conocimientos que le permitan solucionar problemas, generar nuevas experiencias positivas y beneficios para la empresa (Gunawan et al, 2023;Lee et al, 2021).…”

Section: Introductionunclassified

Management skills as a factor of business competitiveness

Álvarez Contreras,

Montes Padilla,

Osorio Martínez

2023

Reg Cient

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Managerial skill is a crucial factor in the formation and performance of effective leaders. This capability fosters strategic alignment in organizational management, especially in adapting to market changes, which has driven new ways of managing, controlling, executing, assessing, and making decisions to achieve operational and mission-related objectives in companies. This article sought to analyze the importance of managerial skills as a key element of business competitiveness. A descriptive qualitative approach was used, drawing from freely accessible electronic documents. The results focus on three main themes: managerial skills as a competitive strategy, fundamental skills of a manager for business competitiveness, and managerial skills as a factor of competitiveness. The findings suggest that companies increasingly require management staff with knowledge, experience, and skills that allow them to achieve objectives and business success. Managerial prowess is, therefore, an essential aspect to foster competitiveness in the corporate realm.

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Do Competent Managers Hoard Bad News? Self-regulation Theory and Korean Evidence

Cited by 5 publications

References 28 publications

Environmental uncertainty and corporate cash holdings: The moderating role of CEO ability

Environmental uncertainty and corporate cash holdings: The moderating role of CEO ability

The Effect of Firm-Specific Environmental Punishment on Stock Price Crash Risk: Evidence From China

Management skills as a factor of business competitiveness

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