Are Founder-Led Firms Less Susceptible to Managerial Myopia?

Charlotte L. Schuster, Alexander T. Nicolai and Jeffrey G. Covin

Entrepreneurship Theory and Practice, 2020, vol. 44, issue 3, 391-421

Abstract: Considerable evidence suggests that CEOs often behave myopically. It is open to debate, however, whether managerial myopia is equally prevalent among founder-led firms. Drawing on agency theory and stewardship theory, we analyze whether founder-led firms are less likely than nonfounder-led firms to cut R&D expenditures in order to meet the short-term earnings goals suggested by these firms’ past performance histories. Our analysis of Standard & Poor’s 1,500 companies from 1992 to 2013 indicates that myopia is an enduring phenomenon and prevalent among very large companies. However, founder-led firms are less likely than nonfounder-led firms to exhibit myopic behavior.

Keywords: founder-CEOs; managerial myopia; earnings management; founder management; research and development expenditures (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:44:y:2020:i:3:p:391-421

DOI: 10.1177/1042258718806627

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