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Balancing control and delegation: the moderating influence of managerial discretion on performance effects of board monitoring and CEO human capital

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  • Yuliya Ponomareva

    (Ramon Llull University)

Abstract

Building on research within corporate governance and strategic management, this paper explores how managerial discretion stemming from managerial task environment influences the balance between controlling and enabling managerial decision-making. Two sets of alternative hypotheses about the moderating effects of managerial discretion on the performance effects of board monitoring and CEO human capital were formulated. The results indicate partial support for governance-driven explanation showing that the association between board monitoring and market-based performance is strongest in environments characterized by high levels of managerial discretion. The findings also show that CEO human capital is positively associated with market-based performance in low-discretion environments, while in high-discretion environments this relationship turns negative. The central contribution of this paper is to demonstrate that managerial discretion is a useful tool to explain the balance between controlling and enabling managerial decision making.

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  • Yuliya Ponomareva, 2019. "Balancing control and delegation: the moderating influence of managerial discretion on performance effects of board monitoring and CEO human capital," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(1), pages 195-225, March.
    • Handle: RePEc:kap:jmgtgv:v:23:y:2019:i:1:d:10.1007_s10997-018-9423-y
    DOI: 10.1007/s10997-018-9423-y
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