The impact of commitment to the status quo on managerial discretion

Abstract

Managerial discretion has been frequently used in management literature to explain why top executives have more or less influence on firms’ success. However, very limited evidence exists on how managerial characteristics shape individual levels of discretion. We empirically analyze how the CEO’s commitment to the status quo (CSQ) affects the personal level of discretion. Our results show that high CSQ reduces the level of managerial discretion. Thus, our study contributes to both the literature on managerial discretion by uncovering rare evidence on its dependence on managerial characteristics and the literature on CSQ by identifying a new dimension of CSQ consequences.