Managerial ability and firm value: A new perspective

Atawnah, Nader, Eshraghi, Arman ORCID: https://orcid.org/0000-0002-7406-1725, Baghdadi, Ghasan and Bhatti, Ishaq 2024. Managerial ability and firm value: A new perspective. Research in International Business and Finance 67 (PartB) , 10213. 10.1016/j.ribaf.2023.102133 Item availability restricted.

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Abstract

Using a sample of U.S. firms over three decades, we examine whether the efficiency with which managers generate revenue has an impact on firm value. We find that managerial ability is positively related to firm value such that one standard deviation increase in ability is associated with a 5.7% increase in firm value relative to the mean level. Importantly, by exploiting exogenous CEO turnover, we establish causality between managerial ability and firm value. This relation is stronger in the presence of corporate governance mechanisms, such as institutional investors and financial analysts. We also document a reduction in value-destroying practices - such as earnings management - in firms with more efficient managers.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Elsevier
ISSN:	0275-5319
Date of First Compliant Deposit:	13 October 2023
Date of Acceptance:	8 October 2023
Last Modified:	07 Nov 2023 13:47
URI:	https://orca.cardiff.ac.uk/id/eprint/163056

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