This paper examines the role of learning in corporate restructuring. Drawing from two viewpoints of organizational learning, absorptive capacity and organizational improvisation, we examine whether experience with corporate restructuring modes (sell‐offs, spin‐offs) influences subsequent restructuring and financial performance. Consistent with an absorptive capacity view, cumulative and repetitive experience with sell‐offs was related to the adoption of an ensuing sell‐off and to higher performance. Conversely, and consistent with an organizational improvisation view, short‐term and contemporaneous experience with spin‐offs was related to the subsequent use of spin‐offs and to increases in financial performance. The findings contribute to a dynamic explanation of corporate restructuring and its influence on financial performance, illustrate differences between learning in a repetitive situation and learning when repetition is rare, and indicate when absorptive capacity and organizational improvisational views are most profitable. Overall, these findings show that different kinds of restructuring experiences were associated with different modes of restructuring and performance records. Considered collectively, the organizational learning perspective offers insights into why some corporate restructuring strategies appear as intentional and deliberate actions while others resemble more spontaneous and simultaneous responses. Copyright © 2008 John Wiley & Sons, Ltd.

We contribute to the behavioral theory of the firm and the behavioral agency model by developing a theoretical framework that predicts the differential interaction effects of performance feedback and values of stock option grants of multiple agents on firm risk taking. We explain how chief executive officers (CEOs) versus outside directors awarded with stock option grants perceive negative or positive deviations from prior performance. We argue that in a negative attainment discrepancy context, high values of option grants will increase the risk aversion of CEOs who already bear excessive employment and compensation risks, resulting in less risk taking; however, it will enhance the risk-taking propensity of influential outside directors who increase monitoring and support for risky projects because their risk preferences are better aligned with those of shareholders. In a positive attainment discrepancy context, high values of option grants will amplify risk aversion in both CEOs and outside directors who perceive risky strategies as potential threats to anticipated incentive values associated with a gain domain, thereby reducing risk-taking activities. Analysis of panel data from 1992 to 2006 on the research and development spending of U.S. manufacturing firms based on Arellano–Bond dynamic panel regression reveals findings largely consistent with our predictions.

No abstract

No abstract

Prior work has examined the effects of absolute levels of outside director stock option grants on risk behavior without recognizing that relative stock option values could differentially affect risk taking. Drawing from the house money effect perspective, we extend this literature by examining how positive deviation from prior outside director option grants values influences firm strategic risk. Additionally we draw from the behavioral agency model and the power literature to develop a multiagent contingency framework suggesting the effect of positive director pay deviation depends on the incentives and power of CEOs reflected in CEO stock ownership and CEO duality, respectively. Our empirical results indicate positive pay deviation has a positive effect on firm risk taking while high ownership and duality independently and jointly weaken this base relationship. Copyright © 2013 John Wiley & Sons, Ltd.