Subjective and intuitive decision-making by managers

The article describes the characteristics of the mechanisms of managerial judgments and intuition. It is considered how: intuition and judgments are based on extensive experience and knowledge; they can be understood from the point of view of signal recognition and subsequent recall of relevant experiences from memory. It is shown that intuition and judgment are an analysis that is fixated on the ability to react quickly through recognition. Some pathologies that are often found in managerial behavior, caused by emotions and stress, as well as the lack of appropriate habits, are revealed. In conclusion, it is suggested that managers include the «future» in the managerial «style» or habit.

EXPRESS: Conflict or Alignment? The Role of Return-oriented Foreign Shareholders and Domestic Relational Shareholders in Mitigating Earnings Management

This study investigates the effects of foreign return-oriented shareholders and domestic relational shareholders of Japanese companies on the earnings management behavior of their invested firms when stock option pay is adopted. We theorize that foreign shareholders seek short-term returns and do not engage in close monitoring due to an information disadvantage while domestic shareholders prevent managerial behavior that distorts information disclosure. Our findings show that managers of firms that use stock option pay engage in earnings management to increase their private financial benefits and meet capital markets’ expectations, which allows them to enhance their own reputation. However, this managerial behavior is contingent on the firm’s ownership structure. Our results show that while foreign shareholders enhance the positive impact of stock options on earning management, domestic shareholders and affiliated directors mitigate this positive effect. Our empirical analyses support the argument that ownership heterogeneity is a key determinant of managerial propensity to engage in earnings management when Japanese firms adopt stock option pay.

Does Real Earnings Management Explain Cost of Debt? Evidence from an Emerging Economy

This study tested the relationship between real earnings management and debt cost in Vietnam, a developing market. We used the Generalized Method of Moments (GMM) Technique on a sample of 241 listed firms in Vietnam for 7 years from 2010 to 2016, with a total of 1687 observations collected. The regression result showed a positive association between real earnings management and cost of debt. The results of the study revealed that real earnings management is shown through the rising transactions and directly affected financial reports, thereby affecting creditors by affecting their cost of debt. This can be seen as the driving force for listed companies to increase the quality of their financial information. Our study only focussed on earnings manipulation through real earnings management (REM) to affect transaction costs in Vietnam. The research explains the relationship between managerial behavior (real earnings management) and direct influence on creditors' behavior (cost of debt capital). The result would give outside stakeholders an overall view about the usage of REM in Vietnamese listed firms, the reasonable action of investors, financial institutions, banks, etc on the debt market to reduce risk and the signal of warning for regulators and policy-makers. Keywords: real activities earnings management, cost of debt capital

Leadership-Powerlessness and Workplace Governance: A Managerial Behavior Context

The growth, sustainability and success of a corporate entity is largely predicated on its framework of interconnecting operational mechanisms, relationships, and processes. As a norm, statutory functions and institutions are enacted in firms to ensure that corporate obligated responsibilities, to themselves as well as their stakeholders, are carried out in a manner that bequeaths enormous benefits. It is a commonsensical expectation that persons saddled with the responsibility to drive these processes, possess requisite and commensurate capacity to act in positive organizational result-oriented directions. However, Executive functionaries in corporate entities seem incapacitated to the extent that the desirable outcomes are not achieved. This work was to determine the contextual behavioral implications of powerlessness in persons occupying leadership positions with a view to highlighting the psychological promptings of the leaders as well as the intruding influences militating against them. This will give a broad knowledge of the issues at stake and a clearer understanding of the solutions proffered. The apparent unencouraging outcomes of corporate entities in Nigeria gave the impetus to this Paper to explore Leadership-powerlessness as a function of the empowerment capacity levels of executive functionaries vis-à-vis workplace governance. This paper regards workplace governance as an end indicative of outcomes that make for growth, sustainability, and survival of corporate entities. The study also suggested ways forward that will mitigate the leadership-powerlessness quagmire.

The impact of corporate governance measures on firm performance: the influences of managerial overconfidence

The paper aims to investigate the impact of corporate governance (CG) measures on firm performance and the role of managerial behavior on the relationship of corporate governance mechanisms and firm performance using a Chinese listed firm. This study used CG mechanisms measures internal and external corporate governance, which is represented by independent board, dual board leadership, ownership concentration as measure of internal CG and debt financing and product market competition as an external CG measures. Managerial overconfidence was measured by the corporate earnings forecasts. Firm performance is measured by ROA and TQ. To address the study objective, the researcher used panel data of 11,634 samples of Chinese listed firms from 2010 to 2018. To analyze the proposed hypotheses, the study employed system Generalized Method of Moments estimation model. The study findings showed that ownership concentration and product market competition have a positive significant relationship with firm performance measured by ROA and TQ. Dual leadership has negative relationship with TQ, and debt financing also has a negative significant association’s with both measures of firm performance ROA and TQ. Moreover, the empirical results also showed managerial overconfidence negatively influences the relationship of board independence, dual leadership, and ownership concentration with firm performance. However, managerial overconfidence positively moderates the impact of debt financing on firm performance measured by Tobin’s Q and negative influence on debt financing and operational firm performance relationship. These findings have several contributions: first, the study extends the literature on the relationship between CG and a firm’s performance by using the Chinese CG structure. Second, this study provides evidence that how managerial behavioral bias interacts with CG mechanisms to affect firm performance, which has not been studied in previous literature. Therefore, the results of this study contribute to the theoretical perspective by providing an insight into the influencing role of managerial behavior in the relationship between CG practices and firm performance in an emerging markets economy. Hence, the empirical result of the study provides important managerial implications for the practice and is important for policy-makers seeking to improve corporate governance in the emerging market economy.

Islamic Corporate Governance and The Performance of Sharia Banks

This study analyzes the influence of Islamic Corporate Governance (ICG) on the performance of sharia banks. This study uses a panel data regression analysis tool. The research sample includes 12 Islamic banks from 2009 to 2019. Based on the 2020 Islamic banking statistics, the number of sharia banks is 12. The sampling technique used is the convenience sampling method. The results showed that Islamic corporate governance has a positive effect on the performance of sharia banks. ICG has a positive effect on financial performance and managerial behavior. Reporting quality and profits are better after implementing strict ICG. Similarly, the size of the bank as a control variable has a positive effect on the performance of Islamic banks.

ISLAMIC ETHICS, ISLAMIC LAW, AND THE PROPER MANAGERIAL BEHAVIOR

The paper is dedicated to two main issues, namely (1) the representation of general Islamic ethics, the analysis of its specific methodology of moral validation by referring to the Qur'an and Sunna, and its interconnectivity with the Islamic law – Shari’a, as well as to (2) presenting Islamic managerial ethics as a derivative from the general Islamic ethics when it comes to both building moral arguments and propagating the proper moral behavior by promoting moral virtues and normatively analyzing what is right and wrong in the particular business situation. Among the used methods, there was content analysis, comparable analysis, inference, and the evolution of the normative theories. Then, the very Islam-specific confluence of ethics and law is discussed. These data are presented and analyzed as a required context for proper understanding of applied ethics in Islam, and in the case of this paper – Islamic managerial ethics.

Coachability and the development of the coachability scale

PurposeThe purpose of this research was to develop a conceptualization and measure of workplace coachability.Design/methodology/approachUsing four independent samples of employed adults, we developed a short and long version of the Coachability Scale. We followed standard scale development practices, presenting evidence of the scales’ factor structure, reliability and validity.FindingsWith the first two samples, we derived an initial three-dimensional version of the Coachability Scale and provided evidence of convergent validity. With Samples 3 and 4, we expanded the scale with additional dimensions related to coaching feedback processes and accumulated additional evidence of the scale's validity, and provided evidence of convergence between the two versions of the Coachability Scale.Research limitations/implicationsWe encourage continued research on the Coachability Scale, as well as research on coachability in formal coaching relationships and with more diverse populations and cultures. It is also important to examine how coachability relates to specific coachee behaviors and outcomes. Although common method bias may be a limitation, we used temporally separated measurements to minimize method bias in Sample 4.Practical implicationsKnowledge about coachability can inform coaching practice decisions and help tailor the coaching engagement to better fit the coachee's needs.Social implicationsMeasuring how individuals respond to coaching and coaching relationships has important implications for managerial behavior and the quality of work life.Originality/valueThis is one of the first studies to develop valid scales for assessing workplace coachability.

Does Shareholding Heterogeneity on First Major Shareholder Incentively Affect Audit Characteristics?-Evidence From Tobacco and Non-tobacco Enterprises

Objectives: This study is to examine the effect of first major shareholders on audit characteristics, and emphasize their incentives towards corporate reform. In addition, we also emphasize on the tobacco industry that is totally state-owned by Chinese central government, as their internal audits are mainly conducted by the State Council. Methods: Taking A-share listed enterprises in Chinese Shanghai and Shenzhen Stock Exchange as samples, this paper analyzes the changes in corporate audit characteristics, which are caused by the holding heterogeneity on the first major shareholders. Then a series of endogenous and robustness tests are to confirm the baseline results. Based on the results of population, we specifically analyze and forecast the tobacco industries. Results: This positive relationship remains significant. Also, the channels for the first major shareholder to reduce non-standard audit opinions originate from their constraints and incentives, which reflect on enhanced supervision, sustainable business operation and market competition. These contribute to their revised managerial behavior. Finally, additional tests illustrate that the effect of strengthened equity is heterogeneous in terms of size, equity nature and growth stage of enterprises. Conclusion: The study domestrates the importance of equity structure and first major shareholders, which calls attention to managerial motives and behavior. The marginal effect is supposed to be shrunk in tobacco business as it is initially in absolute control by public authority. The already economic profits have made it reached favorable audit report. The enhanced shareholdings of first major shareholders could alleviate managerial myopia and moral hazard, and give the inspiration to enterprises in the reform of the ownership structure. Research limitations/implications-Effect of increasing first major shareholders’ holdings on audits is required to be applied in certain situations. However, the unavailable data and minimal samples of listed tobacco enterprises make it hard to clearly estimate the shareholding effect in this certain industry. Therefore, we have to qualitatively analyse tobacco business based on average population. Originality/value-This paper enlarges the role of major shareholders in audit characteristics, and emphasizes their managerial behavior towards audit process. The study indicates that stronger first major shareholdings tend to obtain qualified and standard audit opinions, pay higher audit fees and select high-quality auditors. The results and anlyses could enlight the tobacco and non-tobacco industries.