Managers ability and investment dynamics during the global financial crisis: an emerging market context

Abstract

Purpose Many scholars have developed several theories and empirics to study issues related to investment policy. However, there are still some unexplored issues in the field of finance that require further analysis and investigation, particularly in the corporate governance literature such as the role of managerial talent in the firms. This study investigated the impact of managerial ability on investment decisions of the firms. Design/methodology/approach The study first uses firm efficiency and managerial ability by using data envelope analysis (DEA) proposed by Demerjian, Lev and McVay, 2012. Data is collected for the firms listed in Shenzhen and Shanghai stock exchange for an emerging market of China during the crisis period with 1,640 number of observations. Findings The study reveals that the presence of more managerial talent in a firm is significant for the strategic decisions of the firms. Findings follow a resource-based view and identify that more talented managers help the firms in the acquisition of resources specifically during financial distress. The study subdivides the firms based on: ownership structures and financial constraints. Results generated from propensity score matching imply that the role of high-talented managers is significantly different from that of low-talented managers. Originality/value The study reveals managerial ability as a determinant of investment policy. To the researchers’ best knowledge, none of the previous studies have been conducted in emerging market literature during the crisis period.

Managerial ability, intellectual property rights, R&D: does firm age play a role?

“…Therefore, as part of the robustness testing, the Granger causality test is used to investigate the causality linkages to the study's variables. The Granger causality test is used in multiple studies associated with R&D (Lee, 2012;Huang and Hou, 2019), IPR (Li and Yu, 2015) and managerial ability (Lee et al, 2018;Naheed et al, 2021bNaheed et al, , 2021a. The results of the Granger causality are shown in Table 8.…”

FDI, disinvestment and growth: an appraisal of Bhutanese economy

“…In which investing agency or concerned managers’ role will be crucial in recognizing product life cycle approach. The high-talented managers can rightly gauge the product life cycle with respect to low-talented managers (Naheed et al , 2021). The leadership role is critical for any business success.…”

The moderating effect of financial constraints on the relationship between stock price crash risk and managerial ability

“…Xu et al (2021) assert that superior managers are more apt to disclose high-quality financial reporting. Naheed et al (2021) report that the positive influence of superior managers on company performance during the financial crises is only significant for financially flexible firms. Haider et al (2021) reveal that managerial competence is more prone to conservative reporting to prevent any reputational damage and future career losses.…”

“…We use high managerial ability (HMA) as an alternative proxy for MAS, following Naheed et al (2021). Dummy variable HMA has a value of 1 when MAS exceeds the median and 0 otherwise.…”