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Impact of returnee executives and managerial discretion on excess perquisite consumption

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  • Ge Ren
  • Ping Zeng
  • Xi Zhong

Abstract

This study examines the impact of returnee executives on top management teams' (TMTs') unethical management behavior (e.g., excess perquisite consumption). Synthesizing insights from upper echelons theory and the psychological entitlement literature, this study proposes that returnee executives cause TMTs to generate a high degree of psychological entitlement, which subsequently leads to a high degree of excess perquisite consumption in their firms. In addition, this study proposes that returnee chief executive officers, product diversification, and regional institutional development moderate the aforementioned relationships by influencing managerial discretion. This study provides empirical evidence for the above view using a dataset that was constructed based on 1960 listed Chinese manufacturing companies from 2010 to 2019. From a psychological entitlement perspective, this study confirms, for the first time, that the introduction of returnee executives may have unintended negative consequences, for example, in promoting the excess perquisite consumption activities of TMTs.

Suggested Citation

  • Ge Ren & Ping Zeng & Xi Zhong, 2023. "Impact of returnee executives and managerial discretion on excess perquisite consumption," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 32(2), pages 498-516, April.
    • Handle: RePEc:wly:buseth:v:32:y:2023:i:2:p:498-516
    DOI: 10.1111/beer.12486
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