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Managerial discretion and corporate governance: The bonded relationship
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Moustafa Haj Youssef 
, Da Teng
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
Our study aims to demonstrate the importance of managerial discretion to corporate governance research and deepen our understanding of managerial discretion. Adopting theoretical frameworks and definitions from 93 conceptual and empirical studies on managerial discretion and corporate governance, we argue that extant studies have presented explicit empirical and theoretical definitions of managerial discretion; and have proved the validity, reliability, and replicability of the concept. We argue that corporate governance scholarship cannot move forward without managerial discretion as it provides shareholders and board of directors’ essential guidance on how much freedom in decision-making is to be granted to top managers by deeming the different dimensions of the internal and external environment into consideration. We reinstate our original argument that corporate governance research is not better off without managerial discretion. We also provide a new vantage for corporate governance and managerial discretion scholars to distinguishing between the latitude of actions and latitude of objectives.
Keywords: Managerial Discretion, Corporate Governance, Refutation, Definitions, Executives
Authors’ individual contribution: Conceptualization – M.H.Y. and D.T.; Investigation – M.H.Y. and D.T.; Resources – M.H.Y. and D.T.; Writing – Original Draft – M.H.Y. and D.T.; Writing – Review & Editing – M.H.Y. and D.T.; Visualization – M.H.Y. and D.T.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G34, L21, M12
Received: 18.01.2021
Accepted: 19.03.2021
Published online: 22.03.2021
How to cite this paper: Haj Youssef, M., & Teng, D. (2021). Managerial discretion and corporate governance: The bonded relationship. Corporate Ownership & Control, 18(3), 75-85. https://doi.org/10.22495/cocv18i3art7
