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

Abstract

Purpose This paper aims to demonstrate the efforts of Hay Youssef and Tang (2019) to reaffirm the importance of managerial discretion is unsuccessful. Design/methodology/approach Theoretical frameworks from traditional and recent literature on the concept of managerial discretion are related to corporate governance 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 define the notion of managerial discretion is tantamount to the inability to research it. Practical implications Research on managerial discretion does not provide any advice to owners and directors of boards on granting top executives a high or a low degree of discretion. Originality/value This paper reaffirms the conclusion of Andersen (2017) that corporate governance scholarship will improve if it abandons the concept of managerial discretion.