臺大管理論叢 NTU Management Review VOL.28 NO.3

Does CEO Career Horizon Lead to Corporate Misconduct? Evidence of Taiwanese Semiconductor Firms 146 1. Introduction The literature shows that one of the primary reasons for corporate misconduct is due to the pressure from disappointing earnings (Baucus, 1994; Baucus and Near, 1991; Hill, Kelley, Agle, Hitt, and Hoskisson, 1992; McKendall and Wagner, 1997). Irresponsible conduct in the corporate world, whether centered around corruption, bribery, fraud, or other greed, tends to have negative consequences such as the damage to shareholders’ long-term interests and firm reputation (Daboub, Rasheed, Priem, and Gray, 1995; Greve, Palmer, and Pozner, 2010; Zeidan, 2013). For example, Baucus and Baucus (1997) found that illegal corporate behavior is negatively related to the convicted firms’ long-term profitability. In addition to the impact on financial returns, the misconduct record is viewed as a liability when firms need to develop partnerships (Jensen, 2006; Sullivan, Haunschild, and Page, 2007). Although the literature of corporate misconduct has been burgeoning (O’Connor, Priem, Coombs, and Gilley, 2006; Williams, Fadil, and Armstrong, 2005; Zhang, Bartol, Smith, Pfarrer, and Khanin, 2008), more inquiries into the causes of corporate irresponsible behavior are in need (Chin, Hambrick, and Treviño, 2013; Wu, 2014). According to the literature of corporate misconduct (e.g., Baucus and Near, 1991; Gabbioneta, Greenwood, Mazzola, and Minoja, 2013), the main causes of engaging in irresponsible activities include larger firm size, operating in dynamic or competitive environments, and more records of prior violations. These findings imply certain organizational and environmental conditions allure decision makers to conduct business illegally, but the intent behind the decision should be of more importance. As corporate decisions are ultimately made by the Chief Executive Officer (CEO), some characteristics of the CEO have been proven to be related to corporate irresponsible behaviors, such as executive compensation (Bergstresser and Philippon, 2006; Harris and Bromiley, 2007; Zhang et al., 2008), hubris (Tang, Qian, Chen, and Shen, 2015) or overconfidence (Chen, Crossland, and Luo, 2015), narcissism (Rijsenbilt and Commandeur, 2013), tenure (Williams et al., 2005), etc. Among all possible causes of corporate conducts, the research on the motive of a CEO to engage in irresponsible activities remains sidelined. The career horizon of a CEO is viewed as one of the key factors behind the proactiveness of executive decisions (Antia, Pantzalis, and Park, 2010; Lee and Chang, 2014; Musteen, Barker, and Baeten, 2006; Narayanan, 1985, 1996), but few studies have ever assessed its impact on corporate misconduct. The first objective of this study is thus to examine the effect of CEO career horizon on corporate misconduct.