Do Competent Managers Hoard Bad News? Self-regulation Theory and Korean Evidence

Sangho Lee, Sejoong Lee and Ji Yeon Ryu

Finance Research Letters, 2021, vol. 41, issue C

Abstract: This study investigates the relationship between managerial ability and opportunistic behavior, especially hoarding negative information. Borrowing self-regulation resource theory, we expect that competent managers may have fewer self-regulation resources and are more likely to engage in bad news hoarding because they are exposed to chronic stress to prove their ability by satisfying a high goal. The empirical result supports our anticipation. Furthermore, we also find that a talented manager's opportunistic behavior varies by a firm's earnings persistence and information environment. Our findings provide a more direct link between managerial ability and unethical behavior and extend the line of studies documenting the potential dark side of managerial ability.

Keywords: Manager ability; Bad news hoarding; Self-regulation; Opportunistic behavior (search for similar items in EconPapers)
JEL-codes: G14 M12 M41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316500

DOI: 10.1016/j.frl.2020.101836

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