The impact of CEO contract duration on corporate misconduct

IF 10.5 1区管理学 Q1 BUSINESS

Journal of Business Research Pub Date : 2024-12-02 DOI:10.1016/j.jbusres.2024.115110

Yang Yang, Mingyang Zou

{"title":"The impact of CEO contract duration on corporate misconduct","authors":"Yang Yang, Mingyang Zou","doi":"10.1016/j.jbusres.2024.115110","DOIUrl":null,"url":null,"abstract":"<div><div>CEOs play a crucial role in mitigating organisational misconduct. However, previous studies have mainly focused on the CEO characteristics that help firms choose an appropriate CEOs. Less is known about how to manage risk through contract design when appointing a chief executive to reduce misconduct. This study examines how CEO contract duration affects the likelihood of corporate misconduct. We bridge agency and upper echelon theories to hypothesise the impact of CEO contract duration on corporate misconduct. We also examine how CEO compensation and firm ownership concentration moderate this relationship. Using data collected from multiple sources, we analyse the impact of CEO contract duration on corporate misconduct in listed companies from 1994 to 2022. The results show a U-shaped relationship between CEO contract duration and misconduct. Initially, misconduct decreases with longer CEO contracts but begins to increase as the duration extends further. This relationship is strengthened when CEO compensation and ownership concentration decrease. We also investigate the relationship between CEO succession contract duration and the actual tenure situation, and the results are generally consistent with our hypothesis. Overall, CEO succession contract duration at an intermediate level is more effective in reducing corporate misconduct than other contract durations. Our conclusions contribute to the research on the relationship between CEO contract design and corporate misconduct.</div></div>","PeriodicalId":15123,"journal":{"name":"Journal of Business Research","volume":"188 ","pages":"Article 115110"},"PeriodicalIF":10.5000,"publicationDate":"2024-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Business Research","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0148296324006143","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}

引用次数: 0

Abstract

CEOs play a crucial role in mitigating organisational misconduct. However, previous studies have mainly focused on the CEO characteristics that help firms choose an appropriate CEOs. Less is known about how to manage risk through contract design when appointing a chief executive to reduce misconduct. This study examines how CEO contract duration affects the likelihood of corporate misconduct. We bridge agency and upper echelon theories to hypothesise the impact of CEO contract duration on corporate misconduct. We also examine how CEO compensation and firm ownership concentration moderate this relationship. Using data collected from multiple sources, we analyse the impact of CEO contract duration on corporate misconduct in listed companies from 1994 to 2022. The results show a U-shaped relationship between CEO contract duration and misconduct. Initially, misconduct decreases with longer CEO contracts but begins to increase as the duration extends further. This relationship is strengthened when CEO compensation and ownership concentration decrease. We also investigate the relationship between CEO succession contract duration and the actual tenure situation, and the results are generally consistent with our hypothesis. Overall, CEO succession contract duration at an intermediate level is more effective in reducing corporate misconduct than other contract durations. Our conclusions contribute to the research on the relationship between CEO contract design and corporate misconduct.

查看原文本刊更多论文

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Business Research BUSINESS-

CiteScore

20.30

自引率

10.60%

发文量

956

期刊介绍： The Journal of Business Research aims to publish research that is rigorous, relevant, and potentially impactful. It examines a wide variety of business decision contexts, processes, and activities, developing insights that are meaningful for theory, practice, and/or society at large. The research is intended to generate meaningful debates in academia and practice, that are thought provoking and have the potential to make a difference to conceptual thinking and/or practice. The Journal is published for a broad range of stakeholders, including scholars, researchers, executives, and policy makers. It aids the application of its research to practical situations and theoretical findings to the reality of the business world as well as to society. The Journal is abstracted and indexed in several databases, including Social Sciences Citation Index, ANBAR, Current Contents, Management Contents, Management Literature in Brief, PsycINFO, Information Service, RePEc, Academic Journal Guide, ABI/Inform, INSPEC, etc.