On Market Concentration and Disclosure

Verrecchia (1983,1990) introduced the proprietary cost hypothesis in which exogenous disclosure costs are a reduced-form interpretation of lost competitive advantage in product markets. We develop a micro-foundation for this disclosure cost in a Cournot game and explicitly derive the cost as a function of market structure. When the market is sufficiently competitive, this model has a reduced-form representation similar to a standard voluntary disclosure game with a partial disclosure equilibrium. Proprietary costs are increasing in the number of competitors, the degree of product substitution, overall uncertainty and production costs. The analysis also offers new empirical predictions on the interaction between disclosure choice, managerial horizon and entry.

The Potential of Spirituality for the Treatment of Organizational Trauma

The spiritual approach in dealing with organizational trauma is still relatively uncommon in business management literature. This chapter attempts to show the complexity of the problem through getting over the traditional framework of managerial psychology as defined by modern Western thought. Inspired by the holistic concept of man, the author transcends the usual managerial horizon and introduces a new perspective, which touches on the problem of the meaning of work within the context of the purpose of human life. The description of traumatic experiences in an organization is connected with feelings of guilt, the crisis of the concept of justice, the problem of forgiveness, and finding the inner energy to overcome the trauma and huge disappointment. Organizational trauma may develop into a personal and organizational crisis. This chapter tackles the potential of spirituality (human faith and hope) that gives a new meaning to life and work. Spirituality is connected with some religious systems. It can be instrumental in finding an appropriate treatment.

The Potential of Spirituality for the Treatment of Organizational Trauma

The spiritual approach in dealing with organizational trauma is still relatively uncommon in business management literature. This chapter attempts to show the complexity of the problem through getting over the traditional framework of managerial psychology as defined by modern Western thought. Inspired by the holistic concept of man, the author transcends the usual managerial horizon and introduces a new perspective, which touches on the problem of the meaning of work within the context of the purpose of human life. The description of traumatic experiences in an organization is connected with feelings of guilt, the crisis of the concept of justice, the problem of forgiveness, and finding the inner energy to overcome the trauma and huge disappointment. Organizational trauma may develop into a personal and organizational crisis. This chapter tackles the potential of spirituality (human faith and hope) that gives a new meaning to life and work. Spirituality is connected with some religious systems. It can be instrumental in finding an appropriate treatment.

The effect of managerial horizon on cash holdings

Purpose US corporations are now sitting on an enormous stockpile of cash. Instead of investing their resources and creating jobs, the firms are holding on to excess cash. Academicians and practitioners alike have tried to fathom the reasons why companies are holding on to so much cash. Numerous studies have talked about the various motives for holding cash. Many researchers have tried to correlate excess cash holding with particular firm characteristics. The purpose of this paper is to study the correlations that exist between excess cash holding and some measurable managerial characteristics. Design/methodology/approach Four different measures of managerial horizon (MH) were constructed. The first two constructs (MH1 and MH2) are based on the CEO’s age and how long he has been the CEO of the company. The next two constructs (MH3 and MH4) are based on compensation, proportion of current compensation and proportion of future compensation. This paper tries to examine if MH has any impact on excess cash holding. Findings The results clearly show that the CEO age and the proportion of CEO’s compensation (current and future) do determine level of cash holding in the company. Younger CEOs hold more cash compared to older CEOs. Older CEOs hold less cash suggesting that as CEOs grow older they might be motivated by the idea of leaving a long lasting legacy. CEOs who receive more of their compensation in future payments also hold on to more cash, whereas CEOs who receive more of their compensation in current payments hold less cash. Originality/value There is no previous literature dealing with MH and cash holding by corporations.

Managerial decision horizon and real estate investment trusts (REITs)

Purpose The purpose of this paper is to examine the effects of managerial decision horizon (MDH) on real estate investment trust (REIT) behavior and performance. Design/methodology/approach In this study, the authors expand the number of proxies and measure managerial horizon by CEO age, CEO tenure, cash compensation relative to total compensation, and the amount of vested equity-based compensation to total compensation. To avoid potential measurement error, the authors compute the average ranking score of the four individual measures to determine the overall MDH of a CEO. Cross-sectional time series regressions are then performed on the effects of CEO MDH on REIT policies and performance. The authors also examine if the effect of myopic MDH can be mitigated by good corporate governance. For robustness purpose, the authors also compare the effects of age-related MDH and compensation-related MDH. Findings The results show that REITs managed by CEOs with short MDHs have lower levels of asset growth and a lower standard deviation of return on assets. These REITs also have lower debt levels, lower dividend payouts, and hold more cash. The results suggest that short-horizon CEOs have incentives to lower investment risk, default risk, and liquidity risk at the firm level in order to protect personal benefits. CEOs with a short horizon also have a negative impact on REIT performance. The results also show that CEO compensation-related horizon problems are mitigated by corporate governance, but CEO age-related horizon problems are significant and persistent. The results suggest that age-related behavioral biases of the CEO are important determinants of corporate decisions. Practical implications The results of this study suggest that the managerial behavioral biases should be considered in understanding firm behavior. Originality/value This is the first study that examines the effects of MDH on REIT behavior and performance. The unique regulatory environment of REITs makes them less susceptible to agency problems of free cash flow and thus provides a clearer picture of the effect of MDH. Prior studies focus on the effect of managerial horizon on firm investment activity, this study expands the scope to examine the effects on investment and financial policies. In addition, this study adds to the literature by showing that the effect of age-related horizon problems may not be mitigated by good corporate governance.

The Potential of Spirituality for the Treatment of Organizational Trauma

The spiritual approach in dealing with organizational trauma is still relatively uncommon in business management literature. This chapter attempts to show the complexity of the problem through getting over the traditional framework of managerial psychology as defined by modern Western thought. Inspired by the holistic concept of man, the author transcends the usual managerial horizon and introduces a new perspective, which touches on the problem of the meaning of work within the context of the purpose of human life. The description of traumatic experiences in an organization is connected with feelings of guilt, the crisis of the concept of justice, the problem of forgiveness, and finding the inner energy to overcome the trauma and huge disappointment. Organizational trauma may develop into a personal and organizational crisis. This chapter tackles the potential of spirituality (human faith and hope) that gives a new meaning to life and work. Spirituality is connected with some religious systems. It can be instrumental in finding an appropriate treatment.

CEO Origin and Accrual-Based Earnings Management

SYNOPSIS This study examines the influence of CEO origin on accrual-based earnings management and how these effects evolve over the CEO's tenure in office. Compared with CEOs promoted from within the company, CEOs recruited from outside have a stronger incentive to demonstrate their abilities in the initial years after their appointment; these outside CEOs also may have a lower expectation of surviving the short run. We predict and find that outside CEOs engage in greater income-increasing manipulation in the early years of their tenure. However, the differences in earnings management practices become insignificant after CEOs survive the short run. Our results are robust to a variety of alternative hypotheses and sensitivity checks. The findings thus show that CEO origin is an important factor for explaining financial reporting strategies; they also add to our understanding of CEO origin, managerial horizon problems, and the determinants of aggressive accounting. Data Availability: The data used in this study are publicly available from the sources indicated in the text.