期刊
ACADEMY OF MANAGEMENT JOURNAL
卷 64, 期 1, 页码 265-292出版社
ACAD MANAGEMENT
DOI: 10.5465/amj.2018.1470
关键词
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The study suggests that executives have different risk preferences based on their temporal focus when dealing with wealth. By examining CEO's temporal focus, it reveals that present-focused and future-focused CEOs exhibit different relationships between wealth and risk taking.
The behavioral agency model (BAM) posits that executives endow current wealth, but do not endow prospective wealth. As a result of this endowment effect, executives are risk averse with current wealth and risk seeking with prospectivewealth. These relationships, however, assume that all executives perceive and attend to current and future outcomes similarly, which is at odds with research on temporal orientations. Drawing on the concept of temporal focus, we theorize that present-focused CEOs adhere to the BAM's endowment effect, while exhibiting even stronger relationships between current and prospective wealth and risk taking. In contrast, by nature of being forward-looking, future-focused CEOs endow prospective wealth instead of current wealth, thereby reversing themain relationships of the BAM. Using a sample of 7,700 CEO-year observations from 2003 to 2016, we find empirical support for our arguments in the context of merger and acquisition investment. Findings from this study advance the BAM by showing that the relationship between wealth type and risk taking hinges on CEOs' temporal focus.
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