Can organizational identification mitigate the CEO horizon problem?

Abernethy, Margaret A. and Jiang, Like and Kuang, Yu Flora,(2019), Can organizational identification mitigate the CEO horizon problem? , Accounting, Organizations and Society, UNSPECIFIED

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CEOs of retirement age are likely to exhibit a “horizon problem,” whereby they are reluctant to make decisions that are beneficial to the firm in the long term but potentially costly to the CEOs' personal wealth in the short term.We predict that a CEO with strong organizational identification (OI) will be less likely to behave opportunistically. Our results are consistent with our expectation when we examine three types of decisions that reflect the CEO horizon problem. Specifically, we find that retiring CEOs with strong OI are less likely to reduce research and development investments or decrease the firm's commitment to corporate social responsibility. Retiring CEOs with strong OI also behave less opportunistically when making voluntary disclosures; namely, they issue fewer management earnings forecasts in their last year of employment. Our findings indicate that cultivating a CEO's OI can be an effective way to mitigate her horizon problem
Keywords : Organizational identification Horizon problem R&D investment CSR Management earnings forecasts, UNSPECIFIED
Journal or Publication Title: Accounting, Organizations and Society
Volume: 78
Item Type: Article
Subjects: Akuntansi
Depositing User: Users 8 not found.
Date Deposited: 30 Dec 2019 04:09
Last Modified: 30 Dec 2019 04:09

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