Does the Capital Market Punish Managerial Myopia?

Tong, Jamie Y.; Zhang, Frank

doi:10.2139/ssrn.2395774

Cited by 5 publications

(3 citation statements)

References 72 publications

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“…R&D cuts might be a result of previous overinvestment in R&D. Similarly, inter-firm differences in R&D intensity might be attributed to different levels of R&D productivity. Third, R&D changes affect a company's long-term prospects but are not necessarily associated with short-term goals, which are an integral part of the concept of managerial myopia (Tong & Zhang, 2014).…”

Section: Randd Cuts and Myopic Earnings Managementmentioning

confidence: 99%

Are Founder-Led Firms Less Susceptible to Managerial Myopia?

Schuster

Nicolai

Covin

2018

Entrepreneurship Theory and Practice

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Considerable evidence suggests that CEOs often behave myopically. It is open to debate, however, whether managerial myopia is equally prevalent among founder-led firms. Drawing on agency theory and stewardship theory, we analyze whether founder-led firms are less likely than nonfounder-led firms to cut R&D expenditures in order to meet the short-term earnings goals suggested by these firms’ past performance histories. Our analysis of Standard & Poor’s 1,500 companies from 1992 to 2013 indicates that myopia is an enduring phenomenon and prevalent among very large companies. However, founder-led firms are less likely than nonfounder-led firms to exhibit myopic behavior.

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Section: Randd Cuts and Myopic Earnings Managementmentioning

confidence: 99%

Are Founder-Led Firms Less Susceptible to Managerial Myopia?

Schuster

Nicolai

Covin

2018

Entrepreneurship Theory and Practice

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“…Controlling shareholders of Chinese state‐owned enterprises (SOEs) are unlikely to be forced to sell their shares and lose control rights; thus, we delete SOEs from our sample. We also follow prior studies in excluding financial firms because they are subject to different regulations and accounting standards (D. Li et al., 2022; Tong & Zhang, 2021). We further delete observations with missing values to obtain 13,830 firm years in the final sample.…”

Section: Methods and Datamentioning

confidence: 99%

Does share pledging affect corporate philanthropy? Evidence from China

Xiong

Tong

Zhang

et al. 2023

Business Fin & Account

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We investigate the effect of insiders’ share pledging (SP) on corporate philanthropy and find that SP firms engage in corporate philanthropy more often than non‐SP firms. This effect is more pronounced for firms with higher downward price pressure or margin call risks. Our results remain robust after using alternative measures and addressing endogeneity issues. We also sample a group of SP and non‐SP firms that make comparable philanthropic donations and find that SP firms show better market performance and lower downside risks of stock price movements than non‐SP firms, indicating that SP firms use corporate philanthropy to alleviate margin call risks.

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“…In such a situation, short-sighted investors prefer to look only for short-term returns. Therefore, managers are under pressure to achieve short-term profitability, because investors see nothing but the current profitability of the company, and by selling their shares, they put pressure on companies whose credit rating quality decreases in terms of short-term profitability, and they will, as a result, reduce the stock prices of these companies (Tong and Zhang, 2015). Managers who do not have a strong position tend to be short-sighted and try to increase the company's credit risk in the short term by providing signs of company efficiency to shareholders (Di Meo et al , 2017).…”

Section: Literature Review and Hypothesis Formulationmentioning

confidence: 99%

The impact of management practices and managerial behavioral attributes on credit rating quality

Arianpoor

Yazdanpanah

2022

JABS

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Purpose This study mainly aims to explore the impact of management practices and managerial behavioral attributes on credit rating quality in Tehran Stock Exchange. Design/methodology/approach In this study, 214 firms were assessed from 2014 to 2020. The credit rating quality was measured through Technique for Order of Preference by Similarity to Ideal Solution and the entropy weighting method. In accordance with the theoretical literature, managerial entrenchment, managerial myopia, managerial overconfidence and managerial narcissism were considered as the managerial attributes. Furthermore, to examine management practices, cash flow management and accrual management were explored. Findings The results of this study showed that the cash flow from operations management and the accrual management has a significant positive effect on the credit rating quality. The managerial entrenchment, managerial narcissism and managerial myopia have significant negative effects on credit rating quality, while the effect of managerial overconfidence on credit rating quality is not significant. Originality/value Understanding the factors that affect the credit rating quality is of a great importance. Considering the significance of cash management in the present era and the impact of managerial psychological and behavioral characteristics in the development of the organization, empirical results of this study can help investors, capital market regulators and other stakeholders to strengthen the firm and better decisions.

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Does the Capital Market Punish Managerial Myopia?

Cited by 5 publications

References 72 publications

Are Founder-Led Firms Less Susceptible to Managerial Myopia?

Are Founder-Led Firms Less Susceptible to Managerial Myopia?

Does share pledging affect corporate philanthropy? Evidence from China

The impact of management practices and managerial behavioral attributes on credit rating quality

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