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 150 According to the arguments that derive from agency theory incorporated with psychological perspective, the agency cost increases when CEO career horizon gets shorter (Dechow and Sloan, 1991; Oh et al., 2016). CEOs with shorter career horizon would less likely consider long-term consequences of their decisions (Matta and Beamish, 2008). As Davidson, Xie, Xu, and Ning (2007) found, CEOs with shorter career lengths tend to focus more on short-term earnings for three possible reasons. First, long-term profitability becomes irrelevant to the wealth of those CEOs who are approaching retirement (Gibbons and Murphy, 1992). Second, in addition to the irrelevance of wealth, CEOs nearing the end of their careers tend to maintain firm performance to avoid unexpected job termination. Third, CEOs with shorter expected career lengths have a hard time finding a similar position elsewhere (Antia et al., 2010). In sum, those CEOs approaching retirement are expected to focus more on the short-term gains and stock price stability at the expense of long-term strategy and investment. In other words, when expectations on the short-term earnings might not be reached, CEOs with short career horizon retirement would prefer to try to meet the expectations by any means. Several studies support the idea that CEOs with short career horizons are more likely to have myopic thinking in running business, such as earning manipulation (Barker and Mueller, 2002; Lee and Chang, 2014) or corporate frauds (Johnson, Ryan, and Tian, 2009). In this line of discussion, some studies show the opposite results, although we have grounds for establishing the correlation between CEO career horizon and the odds of committing corporate fraud. Semadeni, Cannella, Fraser, and Lee (2008) indicate that CEOs with shorter expected career horizons tend to preserve their reputation and thus are more cautious about corporate misconduct; that is, CEOs approaching retirement have a higher tendency to maintain a good reputation which may influence their job offers on the boards of other firms after their retirement (Fich and White, 2005; Khanna, Kim, and Lu, 2015). These findings indicate that the relationship between CEO career horizon and corporate misconduct may not be simply positive or negative, but rather an inverted curvilinear effect. A survey conducted by Wang (2010) may further support the above-mentioned argument; this survey collects and provides statistics for entrepreneur crime in China in 2009, including the types of business crime, criminals’ ages, educational levels, and so on. The result shows that the peak age for white-collar crime is from 47 to 53. Although this age bracket is commonly considered the peak of an individual’s career and personal growth, the higher career adaptability and lower career concerns give CEOs more