CEOs’ regulatory focus and firm internationalization: The moderating effects of CEO overconfidence, narcissism and career horizon

Biru, Ashenafi; Filatotchev, Igor; Bruton, Garry D.; Gilbert, David

doi:10.1016/j.ibusrev.2022.102078

Cited by 8 publications

(6 citation statements)

References 130 publications

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“…Prior evidence has demonstrated that different regulatory foci of CEOs have different firm-level responses to various types of strategic decisions, including firm acquisitions (Gamache et al 2015), strategic change (Huang and Zheng 2022), internationalization (Biru et al 2023), and carbon emission performance (Wagner and Fischer-Kreer 2024). Surprisingly, less attention has been paid to exploring the implications of CEO regulatory focus for corporate ethical conduct (e.g., CSR).…”

Section: Literature and Hypothesesmentioning

confidence: 99%

Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Cheng,

Sharpe,

Halabi

2024

JRFM

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Regulatory focus theory theorizes that there are two distinct dispositional foci of self-regulation (promotion focus and prevention focus) that impact individuals’ motivational tendencies to achieve their decision-making processes. This study integrates regulatory focus theory with upper echelons theory to investigate how CEO regulatory focus (i.e., higher degrees of promotion focus relative to prevention focus) influences corporate strategic outcomes, particularly regarding the pursuit of corporate social responsibility (CSR) performance and firm performance. This study uses data collected from the annual reports of S&P 1500 firms in the US from 2000 to 2018. Results show a negative association between CEOs who are predominantly promotion-focused and CSR performance. This negative association is diminished in firms with better corporate governance (i.e., higher CEO equity compensation and greater institutional ownership). The results also show that CSR plays a mediating role in the relationship between CEO regulatory focus and firm performance. These findings not only contribute to the existing literature by highlighting the role of CEO regulatory focus in shaping CSR initiatives but also shed light on its implications for firm performance.

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Section: Literature and Hypothesesmentioning

confidence: 99%

Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Cheng,

Sharpe,

Halabi

2024

JRFM

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“…CEO tenure is the second considered characteristic feature. In 2019 Harvard Business Review compiled a rating of the most efficient CEOs in the world 11 . It is remarkable that on average CEOs from this list have been running their companies for 15 years, which is twice as long as the average tenure of CEOs from S&P 500 (7.2 years).…”

Section: Age Tenure and Ceo Investment Horizonmentioning

confidence: 99%

“…The horizon problem pertains not just to CEOs of companies and shareholders [10]. It affects the interests of all stakeholders [11]. When the investment horizon problem arises in one large company, it subsequently manifests itself in the capital market and, which is even more destructive, at the macroeconomic level -the level of the government.…”

Section: Introductionmentioning

confidence: 99%

Determinants of CEO Investment Horizon. A Literature Review

Podukhovich

2023

КФ

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This paper conducts a comprehensive literature review of the factors influencing the emergence of the CEO investment horizon problem – a preference for short-term investments over long-term ones. The root cause of this CEO issue, as in-dicated in existing literature, is often attributed to the CEO's personal risk attitude, shaped by factors like age, tenure, and cultural background.Numerous sources contributing to the short-term investment problem in public companies are described in the current academic literature. Prominent among these determinants are the challenges of quarterly reporting, the association of corporate performance with short-term metrics, market pressures, and the company's specific risk profile. A study by McKinsey & Company, focused on the short horizon problem, demonstrates that companies inclined toward short-term investments exhibit weaker fundamentals and performance. The consulting firm Ernst & Young has introduced the Long-term Orientation Index, offering a basis for cross-country comparison of decision horizons. In 2010, Antia and colleagues introduced a metric for measuring CEO decision horizons, which relies on CEO personal characteristics. Despite these efforts, a comprehensive literature review addressing the specificity of the CEO investment horizon problem and its dis-tinctions from the broader corporate investment horizon problem has been absent.This paper not only investigates the initial empirical exploration of the short investment horizon problem but also raises questions about its cross-country manifestations, its potential correlation with economic crises, and the relevant personal traits of CEOs for its study. Finally, the paper proposes various strategies to mitigate the CEO investment horizon problem within companies.

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Section: Introductionmentioning

confidence: 99%

“…From a simplified viewpoint, finance scholarship tends to base its reasoning on efficient markets and rational actors, whereas IB focuses more on the elements that make markets (e.g. institutional differences) and actors’ behaviours inefficient, especially in the context of comparative corporate governance (Biru et al , 2023). Whereas financial research strives to describe the fundamental or “typical” functioning of companies by theorizing away differences or by controlling for their idiosyncrasies and irrationalities, strategy and IB commonly hypothesize deviations from normalcy by focusing on such idiosyncrasies.…”

Section: Introductionmentioning

confidence: 99%

Striking a balance? Finance perspectives on international business research

Müllner¹,

Filatotchev²,

Lindner³

2023

MBR

Self Cite

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Purpose The purpose of this paper is to bridge the disciplinary divide between international finance and international business (IB) to realign academic research with business reality in which strategy and finance align to determine firms’ success or failures. Design/methodology/approach The authors discuss theoretical differences between the fields of international finance and IB strategy that caused the fields to develop in isolation with little fertilization across disciplines. The authors review scarce interdisciplinary contributions between the fields. Finally, the authors identify complementarities that suggest fruitful avenues for future research. Findings The authors find a persistent disconnect between finance and strategy/IB literature that can be explained by fundamentally different aims and assumptions about the markets. While finance theory seeks to explain typical effects under functioning markets, strategy and IB theories focus inherently on exceptional effects and market inefficiencies. Research limitations/implications The fundamental theoretical differences that isolate finance and strategy/IB create avenues for interdisciplinary research that harness the complementarities of the two disciplines. These include strategic aspects of capital structure, internal capital market inefficiencies, corporate governance, capital market liability of foreignness and institutional aspects of financial management. Practical implications With this paper, the authors not only bring academic researchers in finance and strategy closer to corporate practice. The theoretical discussion also challenges the functional blind spots of practitioners and encourages more holistic decision-making. Social implications Challenging market functioning and recognizing market inefficiencies using strategy and IB foundations connects financial economics with non-market topics such as environment, society and governance or impact investing. Originality/value The value and originality of the paper come from the qualitative, epistemological approach to study and analyse the divide between international finance and strategy/IB scholarship.

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CEOs’ regulatory focus and firm internationalization: The moderating effects of CEO overconfidence, narcissism and career horizon

Cited by 8 publications

References 130 publications

Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Determinants of CEO Investment Horizon. A Literature Review

Striking a balance? Finance perspectives on international business research

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