Ceo Successor Origin and Corporate Investment Behavior

Although the conventional views have documented that the behavioral interpretation of managerial attributes in terms of successor origin is of critical importance in promoting corporate investment projects, the effect of CEO successor origin on strategic choices in organizations has been inconclusive. This two-year research project aims to explore how CEO successor origin leads to variations in corporate investment behavior. (1) Building on the behavioral agency theory and risk-taking perspective, the first-year study intends to examine whether and how CEO successor types may result in differentiated firm innovativeness. Moreover, firms do not operate in a vacuum but in a specific context, both external and internal situations can moderate a CEO successor’s inclination to firm innovativeness. To an extent that the innovation games in the world inherently imply a high level of uncertainty and idiosyncratic risks, based on the heuristic of real options reasoning, the cross-rival effect of the competition in firm innovativeness may occur simultaneously. Therefore, it is further argued that the impact of focal firm’s successor types on the cross-rival effect in motivating firm innovativeness also poses serious challenges in corporate sustainable development. In a similar vein, the financial slack is likely to create a buffer for different types of CEO successor on determining the strategic choices of firm innovativeness. (2) The next puzzle in exploring the successor issues orientate to whether different types of CEO successors aims to maximize shareholder value. The continuous debate on socially responsible engagement offers the second-year study an appropriate contexture to verify whether the managerial attributes could explain the idiosyncratic risks in engaging strategic CSR activities. As the recent study advocates that the concerns germane to good governance mechanism or agency views on subsequent CSR engagement are ex ante in nature, it is key decision maker’s managerial attributes that tend to have the most pronounced effect on the results of CSR engagement. This study will resort ex ante characteristics to behavioral interpretation in the inherent successor heterogeneity in view of differential risk-taking abilities, and ask: are heir CEOs more socially responsible? And, a further question is: are heir CEOs socially responsible in what specific aspects? Building on the comprehensive theoretical arguments on good governance and agency views, this study attempts to answer the question that both good governance and agency views are of vital concern to a significant extent with managerial attributes, which are ex ante in nature, and expects to contribute to governance research and to crave for insightful managerial implications in CSR engagement. Moreover, this study will further broaden the investigation by examining the effects of managerial attributes on the related CSR participation from suppliers standing on the preliminary evidence that CSR has the intra-industry valuation consequences.

Project ID:PF10708-0642
External Project ID:MOST107-2410-H182-015