An examination of CEOs' psychological and relationship-oriented individual traits influencing exhibited managerial discretion

Research examining Chief Executive Officers' discretion has primarily focused on how industry and organizational forces affect their latitude of action within their role. This is due to the challenges associated with surveying CEOs. Indeed, rather than surveying executives closest to the CEO, most managerial discretion research has used industry proxies for estimating CEOs' discretion. To achieve a more comprehensive understanding of managerial discretion, this dissertation creates a new measure that assesses exhibited, rather than estimated discretion and examines psychological and other individual trait antecedents. For this study's participating companies, CEOs completed surveys with items from three psychology scales and TMT members were surveyed to assess their CEOs' exhibited managerial discretion. Analyses found that ambiguity tolerance, experience in a greater number of industries, and a more internal locus of control were positively associated with managerial discretion. Negative relationships with managerial discretion were found for CEOs' commitment to the status quo and CEOs who find it hard to change their ideas. Positive associations were found for CEOs having structural and ownership power with managerial discretion. Additionally, discretion inherent to CEOs' industries was found to be positively associated with exhibited managerial discretion, while exhibited managerial discretion was found to be positively associated with financial performance. This study contributes to managerial discretion research by crafting a new managerial discretion scale and illustrating how CEOs' psychological traits and power base can influence CEOs' discretion. Future research seeking combinations of CEO traits appropriate for board objectives and various types of companies and industries is recommended.