Abstract
The recent spate of corporate scandals has raised a debate about the amount of control executives have over their firms, which parallels a similar debate about managerial control between agency theory and organization theory. Proponents of corporate governance reform (and agency theory) argue that executives have too much control over the firms that they manage and are in a position to abuse it, while the executives themselves (and many organization theorists) claim that managers can never be in complete control over their entire web of interdependencies. In this paper, I examine managerial control by studying how managers altered their patterns of communication with the investing public during the height of the Enron accounting scandal. I draw from research on the strategic use of attributions and develop competing hypotheses based on the mechanisms of agency theory, resource dependence theory, and social distance. I test these hypotheses by analyzing press releases of quarterly earnings statements from 2001 and 2002 for a sample of firms from the S&P 500 and find results more consistent with resource dependence theory as greater institutional ownership leads managers to take more credit for success but that less managerial ownership and fewer outside directors have no effect. Further analysis shows that having Arthur Andersen as one's auditor was the strongest predictor of attribution change. I conclude with a discussion on the importance of the "court of public opinion" as well as the importance of conducting mechanism-based research.
Original language | English (US) |
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State | Published - 2005 |
Event | 65th Annual Meeting of the Academy of Management, AOM 2005 - Honolulu, HI, United States Duration: Aug 5 2005 → Aug 10 2005 |
Other
Other | 65th Annual Meeting of the Academy of Management, AOM 2005 |
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Country/Territory | United States |
City | Honolulu, HI |
Period | 8/5/05 → 8/10/05 |
Keywords
- Agency theory
- Managerial control
- Resource dependence theory
ASJC Scopus subject areas
- Information Systems and Management