Too bad to fear, too good to dare? Performance feedback and corporate misconduct

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)1-11
Journal / PublicationJournal of Business Research
Volume131
Online published1 Apr 2021
Publication statusPublished - Jul 2021

Abstract

This study explores how a firm's performance feedback (relative to its aspirations) may influence its likelihood of involvement in misconduct. We propose and test curvilinear relationships between aspired performance and corporate misconduct by drawing upon the behavioral theory of the firm. We argue that a U-shaped relationship may exist between aspired performance and corporate misconduct when performance feedback is positive (i.e., performance is above aspirations), in that high performance firstly decreases and then increases the likelihood of misconduct. On the contrary, we propose an inverse U-shaped relationship between aspired performance and corporate misconduct when performance feedback is negative (i.e., performance is below aspirations), in that low performance firstly increases and then decreases the likelihood of misconduct. Evidence from Chinese publicly-listed manufacturers largely supports our predictions.

Research Area(s)

  • Behavioral theory of the firm, Corporate misconduct, Performance feedback, Risk preference