Managerial hubris, firm expansion and firm performance: Evidence from China

Jiang, Fuxiu; Stone, Gregory R.; Sun, Jianfei; Zhang, Min

doi:10.1016/j.soscij.2011.05.007

Cited by 24 publications

(15 citation statements)

References 21 publications

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“…Thus the hubris syndrome is used to describe a person holding a position of power with minimal restrictions to exercise that power and especially when they are irrationally self‐confident, reluctant to listen to advice, and act impulsively. People who suffer from this syndrome display the following characteristics: they tend to be overconfident, they overestimate their own abilities, overpraise their own beliefs, and exaggerate their own performance, while underestimating risks (Finkelstein et al, ; Jiang, Stone, Sun & Zhang, ). Distinguishing the cognitive and behavioral dimension of hubris, Table is a framework for diagnosing executive hubris in practice.…”

Section: A Hubris Perspective On Briberymentioning

confidence: 99%

“…At best, they were used as a conduit to deny involvement or knowledge of the illicit activities taking place abroad. Consumed by hubris, the executives over time perceived bribery as morally justifiable (Collins, Uhlenbruck & Rodriguez, ), exaggerated the firm's performance (Jiang, Stone, Sun, & Zhang, ), which in turn led to excessive media coverage for the firm. Consistent with the observation of Magnam, Cormier, and Lapointe‐Antunes () that nearly all CEOs involved in fraudulent activities experienced positive media coverage, M&J was frequently in the news as having delivered some of the largest bridge construction projects in the UK and overseas.…”

Section: What Fueled Executive Hubris To Drive Bribery At Mandj?mentioning

confidence: 99%

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The Mabey and Johnson bribery scandal: A case of executive hubris

Sarpong

Sajdakova

Adams

2018

Thunderbird Intl Bus Rev

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Convicted for paying bribes to secure contracts abroad, Mabey and Johnson (M&J), a UK construction firm, made both legal and international business history. Drawing on hubris as a lens, we examine M&J's bribery scandal in Ghana and Jamaica. Through a qualitative study of court documents, witness statements, newspaper articles, and internal company emails, we unpack the bribery scheme operated by M&J executives that enabled the firm to illegitimately win major government contracts in Ghana and Jamaica. Fueled by executive hubris, M&J's practice of bribing foreign officials to secure contracts effectively insulated M&J executives from day-today realities. Over time, the firm's executives viewed themselves as infallible, exempt from established mores, invincible, and were unremorseful for their actions. Building on these findings, we develop a hubris-bribery heuristic framework showing how individual, organizational, and institutional contexts constitutively fueled executive hubris, driving bribery at M&J. The implication for theory and practice is examined. K E Y W O R D S bribery, corruption, executive hubris, Ghana, Jamaica, Mabey and Johnson

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Section: A Hubris Perspective On Briberymentioning

confidence: 99%

Section: What Fueled Executive Hubris To Drive Bribery At Mandj?mentioning

confidence: 99%

The Mabey and Johnson bribery scandal: A case of executive hubris

Sarpong

Sajdakova

Adams

2018

Thunderbird Intl Bus Rev

View full text Add to dashboard Cite

show abstract

“…However, when investor have higher information advantage and decides that firm investment is due to firm management overconfidence, investor and firm valuation will be different. Firm management overconfidence, known as Hubris Hypothesis, will have detrimental effect to future firm cashflow and firm risk (F. Jiang, Stone, Sun, & Zhang, 2011). Hence, investor valuation will be more accurate and lower than firm valuation.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The Relation between Dividend and Financial Constraints to Firm Value

Teja¹,

Wilson²,

Chanry³

et al. 2020

J. financ. account. res.

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This study examines the relation between dividends and financial constraints to firm value using publicly traded firms in Indonesia from 2013 to 2017. The very exploration used a repeated cross section regression method to understand monotonic and non-monotonic alliance between dividends and financial constraints to firm value. The non-monotonic correlation measured by dummy variables for 6 dividends categories, i.e. 0 category is defined as firms that did not pay dividends and category 5 is defined as firms that pay dividends with the highest quintile. It is found that monotonic bond lowers the financial constraints that has more important and consistent positive effects on firm value relative to dividends. These findings imply investors to have higher preferences for a firm’s ability to realize good investment projects and provide higher future profits, relative to current profit in the form of dividends. It also found that non-monotonic connection between dividends and firm value and dividends and financial constraints have relatively equal positive effect to firm value.

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“…Failure to realize anticipated benefits may be the result of ex ante unrealistically optimistic projections (that is, managerial hubris) or subsequent changes in markets and external conditions. Literature in strategic management identifies managerial hubris as a major cause of adverse firm performance, especially in explaining the failure of major strategic moves, such as mergers and acquisitions, or decreases in firm profitability (Roll 1986;Jiang et al 2011). Other studies suggest that firms often misestimate costs of regulations including those for food safety (Joshi et al 2001;Morgenstern et al 2001;Ragasa et al 2011b.…”

Section: Strategic Managementmentioning

confidence: 99%

Dynamics of EU food safety certification: a survival analysis of firm decisions

2017

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The article empirically examines the timing of initial decisions to adopt food safety systems and subsequent decisions to maintain the certification. Survival models are used to evaluate firm-level decisions among seafood processors in the Philippines. Whereas initial certification decisions were influenced mainly by easily obtainable a priori indicators such as output price, scale of production, and association membership, decisions to continue certification were influenced by a larger number of less-visible factors including price differentials across markets and cost structures. Managerial hubris may have played a role in initial certification decisions, but decertification decisions were more informed by realized cost-benefit comparisons. Results highlight tendencies to initially overestimate of benefits and underestimate costs of food safety certifications, resulting in unrealistically optimistic projections and may lead to adverse firm performance.

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Managerial hubris, firm expansion and firm performance: Evidence from China

Cited by 24 publications

References 21 publications

The Mabey and Johnson bribery scandal: A case of executive hubris

The Mabey and Johnson bribery scandal: A case of executive hubris

The Relation between Dividend and Financial Constraints to Firm Value

Dynamics of EU food safety certification: a survival analysis of firm decisions

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