A rejoinder on managerial discretion: Andersen (2017) vs Haj Youssef and Teng (2019)

DOIhttps://doi.org/10.1108/CG-09-2019-0276
Pages193-200
Date25 November 2019
Published date25 November 2019
AuthorJon Aarum Andersen
Subject MatterCorporate governance,Strategy
A rejoinder on managerial discretion:
Andersen (2017) vs Haj Youssef
and Teng (2019)
Jon Aarum Andersen
Abstract
Purpose This paper aims to demonstrate the efforts of Hay Youssef and Tang (2019) to reaffirm the
importanceof managerial discretion is unsuccessful.
Design/methodology/approach Theoretical frameworks from traditional and recent literature on the
conceptof managerial discretion are related to corporategovernance scholarship.
Findings There are in fact no studies on managerial discretion based on explicit theoretical and
empirical definitions and thus no studies published which have measured the degrees of managers’
discretion.The conclusion is that the inability to definethe notion of managerial discretionis tantamount to
the inabilityto research it.
Practical implications Research on managerialdiscretion does not provide anyadvice to owners and
directorsof boards on granting top executivesa high or a low degree of discretion.
Originality/value This paper reaffirms the conclusionof Andersen (2017) that corporate governance
scholarshipwill improve if it abandons the concept of managerialdiscretion.
Keywords Managerial discretion, Measurement, Corporate governance, Def‌initions, Usefulness
Paper type Conceptual paper
Introduction
Haj Youssef and Teng (2019, p. 240) reject the conclusion presented in Andersen (2017),
stating: “Several studies have empirically tested and measured the concept of managerial
discretion, some have provided validity and reliability of the concept [...].” This rejoinder
demonstrates that their claim is incorrect.
The work of Andersen (2017) addresses only the concept of managerial discretion. It
focussed on neither the antecedents to managers’ latitude of action nor the
consequences of different degrees of discretion. Andersen (2017) claims that it is
impossible to conduct empirical studies of managerial discretion and the causes for and
effects of discretion when the concept itself is not measured. As the conclusion by
Andersen (2017, p. 584) states:
To date no empirical definition of the concept has been presented and therewith no
measurement has been developed and tested for reliability and validity which contains the three
factors in the concept of managerial discretion as proposed by Hambrick and Finkelstein (1987).
Empirical research has been based on only some of the factors of the concept. As studies
performed more than 30 years neither defined nor measured managerial discretion the same
way, they do not contribute to a cumulative conclusion. Without an empirical definition and
measurement of the concept, no theoretical advancement can occur”.
Wangrow et al. (2014, p. 123) wrote:
Jon Aarum Andersen is
based at O
¨rebro University
Business School, O
¨rebro
University, O
¨rebro,
Sweden.
Received 3 September 2019
Revised 25 September 2019
7 October 2019
Accepted 8 October 2019
DOI 10.1108/CG-09-2019-0276 VOL. 20 NO. 2 2020, pp. 193-200, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 193

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