Fear to lose? An analysis of CEO successors’ decision-making regarding R&D intensity based on behavioral agency theory

2021 ◽  
Author(s):  
Xin Liu
Keyword(s):  
Decision Making ◽  
Agency Theory ◽  
Behavioral Agency

scholarly journals Pesquisa e teoria da agência comportamental: uma revisão e agenda de pesquisa

2020 ◽  
Vol 18 (2) ◽  
pp. 220-236
Author(s):  
RUBENS MUSSOLIN MASSA ◽  
RAUL BEAL PARTYKA ◽  
JEFERSON LANA
Keyword(s):  
Decision Making ◽  
Agency Theory ◽  
Future Research ◽  
Decision Making Process ◽  
Compensation Plans ◽  
Harmful Behavior ◽  
Bibliometric Research ◽  
The Relationship ◽  
Empirical Contribution ◽  
Behavioral Agency

Abstract The behavioral agency theory verifies the relationship between company executives, CEOs, and managers, and their decision-making within the firm. The mechanisms of governance and the forms of remuneration are instruments that monitor internal members avoiding risks that potentially harm the organization’s valuation. This article highlights the importance of the behavioral agency theory both for firms that trust their decision-making process to an agent and for the behavior of this agent. Both aspects are subject to concerns that usually lead to recommendations to establish or improve the executives’ compensation plans. Through bibliometric research analyzing 107 articles, it was possible to verify that executives’ performance compensation, according to agency theory, is the most used mechanism to stimulate executives to make decisions toward the company’s growth and best performance. This study’s theoretical and empirical contribution point to the need for future research on this topic since understanding the agent’s behavior is strategic for companies to help the agent to act on its benefit while reducing the possibilities of inadequate and harmful behavior.

scholarly journals Behavioral agency research and theory: a review and research agenda

2020 ◽  
Vol 18 (2) ◽  
pp. 220-236
Author(s):  
RUBENS MUSSOLIN MASSA ◽  
RAUL BEAL PARTYKA ◽  
JEFERSON LANA
Keyword(s):  
Decision Making ◽  
Agency Theory ◽  
Research Agenda ◽  
Future Research ◽  
Decision Making Process ◽  
Compensation Plans ◽  
Harmful Behavior ◽  
The Relationship ◽  
Empirical Contribution ◽  
Behavioral Agency

Abstract The behavioral agency theory verifies the relationship between company executives, CEOs, and managers, and their decision-making within the firm. The mechanisms of governance and the forms of remuneration are instruments that monitor internal members avoiding risks that potentially harm the organization’s valuation. This article highlights the importance of the behavioral agency theory both for firms that trust their decision-making process to an agent and for the behavior of this agent. Both aspects are subject to concerns that usually lead to recommendations to establish or improve the executives’ compensation plans. Through bibliometric research analyzing 107 articles, it was possible to verify that executives’ performance compensation, according to agency theory, is the most used mechanism to stimulate executives to make decisions toward the company’s growth and best performance. This study’s theoretical and empirical contribution point to the need for future research on this topic since understanding the agent’s behavior is strategic for companies to help the agent to act on its benefit while reducing the possibilities of inadequate and harmful behavior.

scholarly journals Multiple performance pressure inconsistency, resource slack, and the firm’s R&D investment: A behavioral agency theory perspective

2020 ◽  
pp. 234094442091609
Author(s):  
David Diwei Lv ◽  
Weihong Chen ◽  
Hailin Lan
Keyword(s):  
Resource Allocation ◽  
Agency Theory ◽  
Jel Classification ◽  
Organizational Slack ◽  
Managerial Ownership ◽  
Performance Pressure ◽  
The Face ◽  
The Impact ◽  
D Investment ◽  
Behavioral Agency

In the process of operation, firms will face different types of performance pressure. The inconsistency among multiple performance pressure signals has an important impact on resource allocation and R&D investment. However, at present, studies on the impact of multiple performance pressures on the firm’s resource allocation and R&D investment are very limited, and few studies have analyzed the impact of inconsistencies among multiple performance pressure signals on the firm’s R&D investment. Given this research gap, this article empirically tested a model from the perspective of behavioral agency theory, in which inconsistency in long- and short-term performance pressure facilitates the accumulation of organizational slack. We further test the impact of an increase in organizational slack on the firms’ R&D investment intensity and find that this effect is stronger when the level of managerial ownership is comparatively low. These results together indicate that high inconsistency in performance pressure and low managerial ownership jointly facilitate the accumulation of organizational slack, enabling firms to go beyond local search and have more slack searches in the face of multiple performance pressure, which is conducive to an increase in R&D investment. JEL CLASSIFICATION: M10.

scholarly journals To Merge, Sell, or Liquidate? Socioemotional Wealth, Family Control, and the Choice of Business Exit

2019 ◽  
Vol 46 (8) ◽  
pp. 1342-1379 ◽  
Author(s):  
Francesco Chirico ◽  
Luis R. Gómez-Mejia ◽  
Karin Hellerstedt ◽  
Michael Withers ◽  
Mattias Nordqvist
Keyword(s):  
Agency Theory ◽  
Financial Distress ◽  
Family Firms ◽  
Matched Sample ◽  
Financial Returns ◽  
Socioemotional Wealth ◽  
Family Control ◽  
Privately Held Firms ◽  
Exit Options ◽  
Behavioral Agency

We take the perspective that considering the affective motives of dominant owners is essential to understanding business exit. Drawing on a refinement of behavioral agency theory, we argue that family-controlled firms are less likely than non-family-controlled firms to exit and tend to endure increased financial distress to avoid losses to the family’s socioemotional wealth (SEW) embodied in the firm. Yet, when confronted with different exit options and when performance heuristics suggest that exit is unavoidable, family firms are more likely to exit via merger, which we argue saves some SEW, although it is less satisfactory financially. In contrast, nonfamily firms are more likely to exit via sale or dissolution, options that are more prone to offer higher financial returns than mergers. Family and nonfamily firms thus show different orders of exit options. We find support for these arguments in a longitudinal matched sample of privately held firms.

scholarly journals El cargo y descargo como procedimiento jurídico-contable neutralizador de los desequilibrios derivados de las relaciones de agencia

2019 ◽  
Vol 22 (2) ◽  
pp. 225-232
Author(s):  
Susana Villaluenga de Gracia ◽  
Inmaculada Llibrer Escrig
Keyword(s):  
Decision Making ◽  
Asymmetric Information ◽  
Agency Theory ◽  
Economic Activity ◽  
Legal Aspects ◽  
Discharge System ◽  
Agency Relationship ◽  
Toma De Decisiones ◽  
And Control ◽  
The Relationship

El método contable de cargo y descargo, un procedimiento de naturaleza más jurídica que contable, se empleaba cuando la actividad económica de la organización era confiada a un agente, circunstancia que facilita su análisis desde la Teoría de la Agencia. Tradicionalmente ha estado ligado a la toma de decisiones y al control del agente, sobre lo que existe una amplia bibliografía. Sin embargo, hasta ahora no se ha considerado como un instrumento que anula el conflicto de intereses contrapuestos surgidos en la relación entre principal y agente en una gestión delegada.El análisis de los documentos de cargo y descargo, contenido en estudios previos que tienen como base las fuentes documentales manuscritas y en los que se ha estudiado la relación entre principal y agente desde la perspectiva histórico-contable, ha permitido identificar todos los elementos característicos de la relación de agencia, inferir los intereses de principal y agentes, deducir los incentivos empleados por el principal para alinear el comportamiento de los agentes y concluir que este modo de registro era capaz de neutralizar los desequilibrios de intereses y la información asimétrica entre ambos. This paper examines some accounting and legal aspects of the charge and discharge system and the relationship between it and the Agency Theory. This type of accounting was used when the economic activity was entrusted to an agent; it suggests that the Agency Theory is an excellent framework to analyze the accounts. Traditionally the Charge and Discharge has been linked to the decision making and control of the agent's management, on which there is a wide bibliography, however, until now, it has not been considered as an instrument to cancel conflicts that arisen in the relationship between principal and agent and getting the equilibrium of the relationship between them.We analyzed the documents and that allowed us to show different aspects as identify all characteristic elements of the agency relationship, infer the interests of principal and agents, deduct the incentives used by the principal to align the behavior of the agents and conclude that this mode of registration was able to neutralize the imbalances of interests and the asymmetric information between both.

Theorizing Political Responsiveness in Prosecutorial Decision-Making

2021 ◽  
pp. 103-120
Author(s):  
Christina L. Boyd ◽  
Michael J. Nelson ◽  
Ian Ostrander ◽  
Ethan D. Boldt
Keyword(s):  
Decision Making ◽  
Agency Theory ◽  
Presidential Rhetoric ◽  
Empirical Measures ◽  
Congressional Hearings ◽  
Principal Agency Theory

This chapter details our theory for why we should expect the priorities and preferences of the president, Congress, and a U.S. Attorney’s local public to affect prosecutorial behavior. We argue that principal-agency theory provides a useful tool to understand how political principals like the president and Congress can influence U.S. Attorney decision-making. We expect that presidential rhetoric and congressional hearings on crime-fighting priorities will provide important, meaningful signals regarding these principals’ priorities and that federal prosecutors will adjust their behavior depending on the strength of the signals they have received from their principals. Additionally, we anticipate that U.S. Attorneys will be mindful of their local public’s preferences because they are often drawn from the district in which they serve and will continue to work in the district when their tenure ends. We also introduce the empirical measures used to capture political superiors’ communication to federal prosecutors that we rely on in the remainder of the book.

scholarly journals The effect of decision time horizon on short termism: An experimental approach

2021 ◽  
Vol 10 (4, special issue) ◽  
pp. 293-301
Author(s):  
Abdallah Bader Mahmoud Alzoubi ◽  
Gavin Nicholson ◽  
Mohammad Bader Mahmoud Alzoubi
Keyword(s):  
Decision Making ◽  
Agency Theory ◽  
Experimental Approach ◽  
Investment Decision ◽  
Investment Decisions ◽  
Decision Time ◽  
Long Term Performance ◽  
Term Performance ◽  
Short Termism

Short-termism (i.e., the sub-optimal favouring of short-term performance over long-term performance) is generally explained as an outcome of the agency relationship whereby self-interested managers and/or stock market pressures distort the balance between short and long-term performance. We investigate if short termism (Crilly, 2017; Reilly, Souder, & Ranucci, 2016) is due to cognitive bias (temporal distortion) rather than agency costs. We test these hypotheses with an experimental approach by applying a 3x2 factorial design to manipulate temporal distortion on 60 non-conflicted decision-makers. Results suggest that individuals make inconsistent investment decisions based on differing payout time horizons. Participants faced with simple comparisons between investment opportunities were consistent across different time periods and followed a model of rational decision-making. In contrast, more complex decisions led to intertemporal inconsistency. We provide evidence that: 1) individuals on the whole struggle to deal with incorporating time into business decisions in a consistent way causing us to question the link between short-termism and agency theory; 2) principals likely view investment decisions inconsistently across time and so are a cause of sub-optimal investment decision-making and 3) we need to look beyond studies of moral hazard associated with agency theory and/or myopic market pricing when investigating short-termism.

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