TY - JOUR
T1 - CEO Human and Social Capital and Corporate Divestitures: An Investigation of Endowment Effects
AU - Chiu, Shih-Chi
AU - Pathak, Seemantini Madhukar
AU - Hoskisson, Robert E.
AU - Johnson, Richard A
N1 - Our paper intends to contribute to the restructuring literature by examining the underexplored psychological impact (i.e., the endowment effect) in CEOs' decision making during corporate divestiture. We propose that the psychological bias associated with the endowment effect will lead to lower levels of divestiture intensity.
PY - 2014/1/1
Y1 - 2014/1/1
N2 - Our paper intends to contribute to the restructuring literature by examining the underexplored psychological impact (i.e., the endowment effect) in CEOs' decision making during corporate divestiture. We propose that the psychological bias associated with the endowment effect will lead to lower levels of divestiture intensity. Specifically, we argue that CEO position tenure and industry tenure are negatively associated with a firm's divestiture intensity; whereas, CEO board memberships lead to more intense restructuring. Our theoretical model further examines two external moderators, i.e., the presence of financial advisors and environmental munificence, in helping CEOs mitigate (or exacerbate) managerial endowment effect at the time of restructuring. Our data based on 230 restructuring programs executed in U.S. between 1986 and 2009 provided strong support for our theoretical model associated with the endowment effect in explaining the sources of variations in firms' divestment decisions during restructuring.
AB - Our paper intends to contribute to the restructuring literature by examining the underexplored psychological impact (i.e., the endowment effect) in CEOs' decision making during corporate divestiture. We propose that the psychological bias associated with the endowment effect will lead to lower levels of divestiture intensity. Specifically, we argue that CEO position tenure and industry tenure are negatively associated with a firm's divestiture intensity; whereas, CEO board memberships lead to more intense restructuring. Our theoretical model further examines two external moderators, i.e., the presence of financial advisors and environmental munificence, in helping CEOs mitigate (or exacerbate) managerial endowment effect at the time of restructuring. Our data based on 230 restructuring programs executed in U.S. between 1986 and 2009 provided strong support for our theoretical model associated with the endowment effect in explaining the sources of variations in firms' divestment decisions during restructuring.
UR - http://dx.doi.org/10.5465/ambpp.2014.17722abstract
U2 - 10.5465/AMBPP.2014.17722abstract
DO - 10.5465/AMBPP.2014.17722abstract
M3 - Article
VL - 2014
JO - Academy of Management Proceedings
JF - Academy of Management Proceedings
ER -