Performance feedback is recognized as a trigger of corporate misconduct, but there remains much uncertainty about the misconduct tendencies of well performing firms. We develop a strain-based model with two latent mechanisms related to past achievement: the pressure to catch up and the pressure to keep up. We contend that the two strains jointly create a U-shaped relationship between firm overperformance and financial misconduct. We further theorize that firm owners (state and family) are not likely to feel the strains uniformly nor respond similarly to political pressures to curb misconduct. Our analysis of 3528 Chinese public firms before and after President Xi Jinping’s era provides support to our theoretical model and important advances to behavioral theory of the firm and corporate misconduct research.
|Title of host publication||Academy of Management Annual Meeting Proceedings|
|Place of Publication||New York|
|Publisher||Academy of Management|
|Publication status||Published - 24 Jul 2023|