Pressure to excel and corporate misconduct: data analysis based on Chinese listed firms

HE Xiaogang1,2 DENG Hao1 WU Shiyu1 LIANG Peng1

(1.School of International Business Administration, Shanghai University of Finance and Economics)
(2.Shanghai University of Finance and Economics Zhejiang College)

【Abstract】Executive managers have incentives to conduct upward comparison. And some firms make pursuing becoming “No. 1” as their future business goal in mission statements. Such aspiration-oriented goal setting brings along institutionalized pressure to excel, which will impose significant effect upon corporate misconduct like illegal operations and rent-seeking activities. This essay includes institutionalized pressure to excel in misconduct decision-making model and empirically research on data of Chinese listed firm from 2007 to 2012. Research results of this essay show that the higher institutionalized pressure to excel firms face with, the more they are motivated to engage in misconduct such as illegal operations and rent-seeking. In addition, this research also finds that firms’ external competition environment imposes significant moderation effect upon institutionalized pressure to excel and corporate misconduct. The higher the industry competitiveness is, the more likelihood will be increased that firms with pressure to excel would engage in misconduct. The cost of carry publicized by securities analysts on capital market adds to incentives for aspiration-oriented firms to take misconduct. This essay introduces the strategy to excel—firms pursuing the best performance or status—into decision-making model, which offers a new perspective in understanding risk taking behavior of firms in decision-making and enriches research achievement on corporate misconduct.

【Keywords】 strategy to excel; pressure to excel; misconduct; industry competitiveness; analysts’ assessment;


【Funds】 This research is sponsored by National Natural Science Foundation of China (71172140, 71372037) Shanghai Municipality Social Sciences Development Project (2011BGL007) and Follow-up Program of State Projects at Shanghai University of Finance and Economics (2012110294)

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    [1]. 1 In actual practice, screening of matching variables in this research is done in the way of stepwise regression and exclusion. Due to page limit, specific Logit regression process and results are not presented in the essay and they are available with the authors upon request. [^Back]

    [2]. 2 In addition, this research also adopts radium matching and kernel matching. The results are similar. [^Back]

    [3]. 3 Due to page limit, examination results are not presented in the essay and they are available with the authors upon request. [^Back]


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This Article


CN: 11-1235/F

Vol , No. 09, Pages 104-124

September 2015


Article Outline


  • 1 Preface
  • 2 Related literature and theoretical hypothesis
  • 3 Data source and sample characteristics
  • 4 Examination result and discussion
  • 5 Robustness test
  • 6 Conclusion
  • Footnote