- 期刊
- OpenAccess
Manager's Discretion Strength and Operating Efficiency: An U-shape Approach
摘要
With corporate governance (CG) increasing, firm value may not always increase. Due to the trade-off relation, manager's discretion is limited and controlled by CG. However, when firm faces market with rapid change, enough manager's discretion can assist firm to make response correctly and quickly, especially in high-tech industry. Moreover, the performance and CG may be affected by some factors simultaneously which cannot be observed, and the endogenous problem exists between them. This is why that the difference results exist in the prior researches. Thus, we employ two-stage data envelopment analysis (DEA) model to calculate the firm's efficiency instead of performance. Based on prior literatures, we utilize corporate governance index (G-index) as a proxy of manager's discretion variable to explore the optimal point of the manager's discretion. The finding is that the production efficiency increases if the manager's discretion increases suitably. Therefore, if owners can release suitable discretion to manager, manager will lead the corporate to operate more efficient. In the other word, over-limited or non-limited discretion may drive the efficiency decline. In addition, we can obtain an optimal level of manager's discretion which owners can release to manager. Therefore, corporate needs to make a suitable corporate governance system to give managers enough discretion to earn a more profit for themselves and owners.