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 164 CEO career horizon has an inverted curvilinear effect on the likelihood of corporate misconduct. However, controlling the CEO career horizon only is not an effective safeguard to reduce the odds of corporate misconduct. This study thus considered the moderating effect of board governance, which may contribute to theoretical and practical significance in our understanding of corporate misconduct, as well as shed new light on its prevention mechanism. The empirical evidence does not support that the board size mitigates the effect of CEO career horizon on corporate misconduct, but the functional diversity of company board does. In the following subsections, the theoretical and practical implications are further discussed. 5.1 Theoretical Implications The theoretical contribution of this study is to firstly extend the body of knowledge in the causes of corporate misconduct by showing that the direct and indirect effects of CEO career horizon. That is, the CEO’s career horizon relates non-linearly to his or her perception and assessment of the course of actions. This finding is consistent with some socio-psychological evidence that age matters with the perception of ethics and behavioral intentions (Hilton, Oh, and Al-Lawati, 2006; Shreffler, Johnson, and Scheuble, 2010). In other words, the interest-alignment argument of the agency theory needs to be complemented by the psychological assessment. Also, echoing von den Driesch, da Costa, Flatten, and Brettel (2015), our finding also points out the double-edged sword effects of CEO career horizon by showing a non-linear effect of CEO career horizon or age on corporate behavior. In addition to the direct effect of CEO career horizon, this study further investigated the moderating effect of board governance on corporate misconduct. Although corporate board has been seen as an important solution for preventing corporate wrongdoings, prior studies have rarely examined the interplay between CEO career horizon and board governance. This study extends our knowledge by examining the moderating effects of board size and board’s functional diversity. Regarding the moderating effect of board size, the insignificant effect indicates that simply increasing the board seats cannot solve the problem caused by self-serving executives. One interpretation is that the free riding problem emerges when board size increases, and that as an immediate consequence, monitoring decreases (Ghosh, 2006). Compared with the findings of prior studies, such as Goodstein, Gautam, and Boeker (1994), a large-sized board may be useful in accessing external resources but is not necessarily germane to the issue of misconduct prevention.
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