Impact of returnee executives and managerial discretion on excess perquisite consumption

Abstract

This study examines the impact of returnee executives on top management teams' (TMTs') unethical management behavior (e.g., excess perquisite consumption).Synthesizing insights from upper echelons theory and the psychological entitlement literature, this study proposes that returnee executives cause TMTs to generate a high degree of psychological entitlement, which subsequently leads to a high degree of excess perquisite consumption in their firms. In addition, this study proposes that returnee chief executive officers, product diversification, and regional institutional development moderate the aforementioned relationships by influencing managerial discretion. This study provides empirical evidence for the above view using a dataset that was constructed based on 1960 listed Chinese manufacturing companies from 2010 to 2019. From a psychological entitlement perspective, this study confirms, for the first time, that the introduction of returnee executives may have unintended negative consequences, for example, in promoting the excess perquisite consumption activities of TMTs.

Does performance persistence below aspirations affect firms' accounting information disclosure strategies? An empirical study based on reliability and comparability

“…To ensure the reliability of the research conclusions, we screened the data as follows. First, we removed the samples marked as Special Treatment (Ren, Zeng, & Zhong, 2022) and the financial industry (Xu et al, 2019; Zhang et al, 2020) because there are significant differences in accounting information processing between these companies and other companies. Second, we removed samples with missing data to facilitate normal empirical testing (Chen et al, 2022).…”

Do academic CEOs influence corporate social irresponsibility? The moderating effects of negative attainment discrepancy and slack resources

“…To avoid reverse causality, all variables except the dependent variables are lagged by 1 year. Following previous studies (Ren et al, 2023; Schuler et al, 2017), we exclude firms in the finance industry, firms with special treatment (ST) and firms with one or more missing data. The final sample consists of 20,212 firm‐year observations of 3342 firms.…”

“…More precisely, the managerial discretion literature profoundly suggests that CEOs' intrinsic characteristics, such as value orientation and mindset, cannot be mapped to actual corporate actions unless they have the free space or the power to make strategic decisions (i.e. managerial discretion) (Finkelstein & Hambrick, 1990; Ren et al, 2023; Wangrow et al, 2015). Literature on corporate behavior research suggests that shareholders and boards of directors evaluate the performance of decision‐makers in light of the firm's past performance and resources before deciding whether to provide them greater support or impose more restrictions (Cyert & March, 1963; Lin & Cheng, 2013; Sirén et al, 2018; Zhong et al, 2021).…”

“…If academic CEOs do influence CSIR, an important question is what factors influence the degree of managerial freedom that academic CEOs have to translate their ethical preferences into concrete actions. As managerial discretion reflects the extent to which decision‐makers are free to make decisions (Wangrow et al, 2015), CEOs without managerial discretion cannot incorporate their own values and mindsets into the decisions made by their organizations (Ren et al, 2023; Wangrow et al, 2015). Therefore, we further discuss the moderating role of negative attainment discrepancy (performance below aspirations) and slack resources (Chen, 2008; Cyert & March, 1963).…”

Differentiation strategies and firms' environmental, social and governance: The different moderating effects of historical and social performance shortfalls

“…China provides a good empirical environment in which to test our theoretical arguments. First, China is the largest emerging economy with a more developed corporate economy, which provides us with richer empirical data (Ren et al, 2023). Second, the drawbacks of the traditional crude economic development model (e.g.…”