IDEAS home Printed from https://ideas.repec.org/a/eee/mulfin/v22y2012i5p263-277.html
   My bibliography  Save this article

How do entrenched managers handle stakeholders interests?

Author

Listed:
  • Chung, Huimin
  • Lin, Jane Raung
  • Yang, Ying Sui

Abstract

This study examines the impact of managerial entrenchment on non-shareholding stakeholders. We find that managers tend to focus different levels of attention on specific non-shareholding stakeholders relative to their level of entrenchment. When managers have greater protection, they tend to establish good relationships with certain stakeholders, particularly with regard to the natural environment. However, well-protected managers attempt to minimize any damage to workforce diversity and often increase the damage to the employees and the natural environment. Entrenched managers pay more attention to stakeholders who can have a positive influence on the short-term financial performance of the firm. However, negative social actions have insignificant effect on financial performance.

Suggested Citation

  • Chung, Huimin & Lin, Jane Raung & Yang, Ying Sui, 2012. "How do entrenched managers handle stakeholders interests?," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 263-277.
    • Handle: RePEc:eee:mulfin:v:22:y:2012:i:5:p:263-277
    DOI: 10.1016/j.mulfin.2012.10.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1042444X12000394
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.mulfin.2012.10.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    2. Lois Mahoney & Linda Thorn, 2006. "An Examination of the Structure of Executive Compensation and Corporate Social Responsibility: A Canadian Investigation," Journal of Business Ethics, Springer, vol. 69(2), pages 149-162, December.
    3. K. J. Martijn Cremers & Vinay B. Nair, 2005. "Governance Mechanisms and Equity Prices," Journal of Finance, American Finance Association, vol. 60(6), pages 2859-2894, December.
    4. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 107-156.
    5. Boone, Audra L. & Casares Field, Laura & Karpoff, Jonathan M. & Raheja, Charu G., 2007. "The determinants of corporate board size and composition: An empirical analysis," Journal of Financial Economics, Elsevier, vol. 85(1), pages 66-101, July.
    6. Ayuso, Silvia & Argandoña, Antonio, 2007. "Responsible corporate governance: Towards a stakeholder board of directors?," IESE Research Papers D/701, IESE Business School.
    7. Gerwin Laan & Hans Ees & Arjen Witteloostuijn, 2008. "Corporate Social and Financial Performance: An Extended Stakeholder Theory, and Empirical Test with Accounting Measures," Journal of Business Ethics, Springer, vol. 79(3), pages 299-310, May.
    8. Greenley, Gordon E. & Hooley, Graham J. & Rudd, John M., 2005. "Market orientation in a multiple stakeholder orientation context: implications for marketing capabilities and assets," Journal of Business Research, Elsevier, vol. 58(11), pages 1483-1494, November.
    9. Abagail McWilliams & Donald Siegel, 2000. "Corporate social responsibility and financial performance: correlation or misspecification?," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 603-609, May.
    10. Aleksandra Kacperczyk, 2009. "With greater power comes greater responsibility? takeover protection and corporate attention to stakeholders," Strategic Management Journal, Wiley Blackwell, vol. 30(3), pages 261-285, March.
    11. Christopher Robertson, 2008. "An Analysis of 10 years of Business Ethics Research in Strategic Management Journal: 1996–2005," Journal of Business Ethics, Springer, vol. 80(4), pages 745-753, July.
    12. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
    13. John E. Core & Wayne R. Guay & Tjomme O. Rusticus, 2006. "Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations," Journal of Finance, American Finance Association, vol. 61(2), pages 655-687, April.
    14. Benjamin E. Hermalin & Michael S. Weisbach, 1988. "The Determinants of Board Composition," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 589-606, Winter.
    15. Ronald W. Masulis & Cong Wang & Fei Xie, 2007. "Corporate Governance and Acquirer Returns," Journal of Finance, American Finance Association, vol. 62(4), pages 1851-1889, August.
    16. Carmelo Cennamo & Pascual Berrone & Luis Gomez-Mejia, 2009. "Does Stakeholder Management have a Dark Side?," Journal of Business Ethics, Springer, vol. 89(4), pages 491-507, November.
    17. Benston, George J., 1982. "An analysis of the role of accounting standards for enhancing corporate governance and social responsibility," Journal of Accounting and Public Policy, Elsevier, vol. 1(1), pages 5-17.
    18. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    19. Jordi Surroca & Josep A. Tribó, 2008. "Managerial Entrenchment and Corporate Social Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(5‐6), pages 748-789, June.
    20. Barbara Lougee & James Wallace, 2008. "The Corporate Social Responsibility (CSR) Trend," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(1), pages 96-108, December.
    21. Andrea Beltratti, 2005. "The Complementarity between Corporate Governance and Corporate Social Responsibility," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 373-386, July.
    22. Bert Scholtens & Yangqin Zhou, 2008. "Stakeholder relations and financial performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 16(3), pages 213-232.
    23. Oxelheim, Lars & Randoy, Trond, 2003. "The impact of foreign board membership on firm value," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2369-2392, December.
    24. Aragon-Correa, Juan Alberto & Matias-Reche, Fernando & Senise-Barrio, Maria Eugenia, 2004. "Managerial discretion and corporate commitment to the natural environment," Journal of Business Research, Elsevier, vol. 57(9), pages 964-975, September.
    25. Coles, Jeffrey L. & Daniel, Naveen D. & Naveen, Lalitha, 2008. "Boards: Does one size fit all," Journal of Financial Economics, Elsevier, vol. 87(2), pages 329-356, February.
    26. Bhagat, Sanjai & Bolton, Brian, 2008. "Corporate governance and firm performance," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 257-273, June.
    27. Amy J. Hillman & Gerald D. Keim, 2001. "Shareholder value, stakeholder management, and social issues: what's the bottom line?," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 125-139, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dr. Sonia MOUSSA & Dr. Houssem RACHDI & Aymen AMMERI, 2013. "Governance, Managers’ Entrenchment and Performance: Evidence in French Firms Listed in SBF 120," International Journal of Business and Social Research, LAR Center Press, vol. 3(2), pages 35-48, February.
    2. Olukorede Adewole, 2024. "The need for social equality from emerging patterns in business and costs towards environmental sustainability in a new paradigm shift," International Journal of Corporate Social Responsibility, Springer, vol. 9(1), pages 1-28, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sugato Chakravarty & Chiraphol N. Chiyachantana & Christine Jiang, 2011. "THE CHOICE OF TRADING VENUE AND RELATIVE PRICE IMPACT OF INSTITUTIONAL TRADING: ADRs VERSUS THE UNDERLYING SECURITIES IN THEIR LOCAL MARKETS," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 34(4), pages 537-567, December.
    2. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    3. Robert Campbell & Chinmoy Ghosh & Milena Petrova & C. Sirmans, 2011. "Corporate Governance and Performance in the Market for Corporate Control: The Case of REITs," The Journal of Real Estate Finance and Economics, Springer, vol. 42(4), pages 451-480, May.
    4. Eugene Kang & Mark Kroll, 2014. "Deciding Who Will Rule: Examining the Influence of Outside Noncore Directors on Executive Entrenchment," Organization Science, INFORMS, vol. 25(6), pages 1662-1683, December.
    5. Ferreira, Daniel & Ferreira, Miguel A. & Raposo, Clara C., 2011. "Board structure and price informativeness," Journal of Financial Economics, Elsevier, vol. 99(3), pages 523-545, March.
    6. Andreou, Panayiotis C. & Louca, Christodoulos & Panayides, Photis M., 2014. "Corporate governance, financial management decisions and firm performance: Evidence from the maritime industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 59-78.
    7. Ahn, Seoungpil & Shrestha, Keshab, 2013. "The differential effects of classified boards on firm value," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 3993-4013.
    8. McKnight, Phillip J. & Weir, Charlie, 2009. "Agency costs, corporate governance mechanisms and ownership structure in large UK publicly quoted companies: A panel data analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 139-158, May.
    9. Mukesh Nepal & Rajat Deb, 2022. "Board Characteristics and Firm Performance: Indian Textiles Sector Panorama," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 47(1), pages 74-96, February.
    10. Jimmy A. Saravia, 2014. "Why has the literature on corporate governance and firm performance yielded mixed results?," Documentos de Trabajo de Valor Público 10914, Universidad EAFIT.
    11. repec:csr:wpaper:1014 is not listed on IDEAS
    12. Wintoki, M. Babajide & Linck, James S. & Netter, Jeffry M., 2012. "Endogeneity and the dynamics of internal corporate governance," Journal of Financial Economics, Elsevier, vol. 105(3), pages 581-606.
    13. Dr. Sonia MOUSSA & Dr. Houssem RACHDI & Aymen AMMERI, 2013. "Governance, Managers’ Entrenchment and Performance: Evidence in French Firms Listed in SBF 120," International Journal of Business and Social Research, LAR Center Press, vol. 3(2), pages 35-48, February.
    14. Aharony, Joseph & Liu, Chelsea & Yawson, Alfred, 2015. "Corporate litigation and executive turnover," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 268-292.
    15. Rasha Ashraf & Rajesh Chakrabarti & Richard Fu & Narayanan Jayaraman, 2010. "Takeover Immunity, Takeovers, and the Market for Nonexecutive Directors," Financial Management, Financial Management Association International, vol. 39(1), pages 83-127, March.
    16. Le Quang, Canh & Kim, Kwang Soo & Yi, Yu, 2014. "Effects of Corporate Governance on the Performance of Private Economic Groups in Vietnam," MPRA Paper 81062, University Library of Munich, Germany, revised 2014.
    17. Panayiotis C. Andreou & Constantinos Antoniou & Joanne Horton & Christodoulos Louca, 2016. "Corporate Governance and Firm†specific Stock Price Crashes," European Financial Management, European Financial Management Association, vol. 22(5), pages 916-956, November.
    18. Liu, Chunyan & Uchida, Konari & Yang, Yufeng, 2012. "Corporate governance and firm value during the global financial crisis: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 21(C), pages 70-80.
    19. Đặng, Rey & Houanti, L’Hocine & Reddy, Krishna & Simioni, Michel, 2020. "Does board gender diversity influence firm profitability? A control function approach," Economic Modelling, Elsevier, vol. 90(C), pages 168-181.
    20. Akbar, Saeed & Poletti-Hughes, Jannine & El-Faitouri, Ramadan & Shah, Syed Zulfiqar Ali, 2016. "More on the relationship between corporate governance and firm performance in the UK: Evidence from the application of generalized method of moments estimation," Research in International Business and Finance, Elsevier, vol. 38(C), pages 417-429.
    21. Georgeta Vintila & Stefan Cristian Gherghina, 2013. "Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 885-900.

    More about this item

    Keywords

    Managerial entrenchment; Corporate social responsibility; Anti-takeover provisions; Environmental stakeholder; Financial performance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mulfin:v:22:y:2012:i:5:p:263-277. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/mulfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.