Managerial Ability and External Financing

Choo, Min Rui; Wang, Chih Wei; Yin, Chi; Li, Jie Lun

doi:10.1007/s10690-020-09313-5

Cited by 4 publications

(7 citation statements)

References 57 publications

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“…, 2010; Gan and Park, 2017). In a business environment characterized by information risks, competent CEOs prioritize equity financing and reduce their loan financing (Choo et al. , 2021).…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…Studies have shown that the ability of top executives has an incremental effect on, for example, firm-level financial performance, cash valuation and investment (Andreou et al, 2017;Chang et al, 2010;Gan and Park, 2017). In a business environment characterized by information risks, competent CEOs prioritize equity financing and reduce their loan financing (Choo et al, 2021). However, Shang (2021) presents evidence that short-term debt has a positive relationship with managerial ability.…”

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confidence: 99%

“…Managers' talent allows them to assess refinancing risks, understand firms' growth potential and rely more on short-term borrowing. In this regard, more ably managed firms have lower transaction costs and slower capital structure adjustment to target levels since they are less likely to experience reduced firm value (Choo et al, 2021). Earlier evidence also investigates the role of CEO ability on tax avoidance (Higgins et al, 2015) and investment decisions (Navissi et al, 2017), among other factors.…”

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confidence: 99%

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The importance of managerial discretion on managerial ability–firm cash holding nexus

Magerakis

2022

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PurposeThis paper examines the role of managerial discretion in the relation between managerial ability on the level of corporate cash.Design/methodology/approachConjoining the upper echelons theory's premises and the theoretical framework of cash holdings, we posit that the managerial ability's effect on cash policy varies with managerial discretion using firm-level data. To test the empirical prediction, we employ a linear regression model with fixed effects with a sample of US listed firms from 1980 to 2016.FindingsThe findings reveal that the positive association between the ability of chief executive officers and corporate cash savings is weakened by firm-level managerial discretion. The results are robust to various additional analyses, namely lagged independent variables regression, reduced form regression and granger causality test. Overall, the findings are generally consistent with the cash holding motives yielding transaction and precautionary demand for money. However, our findings also shed light on whether managerial discretion moderates or exacerbates agency problems related to top executives' cash holding policies.Originality/valueThis work's distinct characteristic is the investigation of the joint effect of managerial talent and discretion on a firm's cash holding, which remains unexplored in the literature.

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“…, 2010; Gan and Park, 2017). In a business environment characterized by information risks, competent CEOs prioritize equity financing and reduce their loan financing (Choo et al. , 2021).…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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confidence: 99%

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The importance of managerial discretion on managerial ability–firm cash holding nexus

Magerakis

2022

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“…The managerial heterogeneity literature (e.g., Demerjian et al 2013;Yung and Chen 2018;Baik et al, 2020;Chen et al, 2020a;Choo et al, 2020;Doukas and Zhang, 2020;Hesarzadeh, 2020;Luu et al, 2020;Oskouei and Sureshjani, 2020;Yung and Nguyen, 2020) indicates that managerial abilitydefined as higher power in the generation of sales revenue for a given set of resources the firm owns (Demerjian et al, 2012) is an important factor that affects tax avoidance, corporate investment, cost of debt, corporate innovative success, executive compensation and firm performance. 1 Particularly, in the context of financial reporting, prior studies (e.g., Demerjian et al, 2013;Huang and Sun, 2017) show that managerial ability significantly affects earnings quality.…”

Section: Introductionmentioning

confidence: 99%

Managerial ability, earnings quality and ISIS: evidence from Iraq

Bazrafshan

Makarem

Hesarzadeh

et al. 2021

IJOEM

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PurposeThis study investigates the association between managerial ability and earnings quality in firms listed on the Iraq Stock Exchange and how the emergence of the Islamic State of Iraq and Syria (ISIS) influences the association.Design/methodology/approachThis study uses a sample of firms listed on the Iraq Stock Exchange over the period 2012–2018. Managerial ability is quantified using data envelopment analysis, and earnings quality is measured by earnings restatement, earnings persistence, accruals quality and earnings response coefficient. Panel regression analysis is used to examine the research hypotheses.FindingsThe findings indicate that managerial ability positively affects earnings quality of Iraqi firms and that ISIS weakens the relationship between managerial ability and earnings quality. These findings are robust to the alternative measures of managerial ability, as well as to various approaches used to address endogeneity including propensity-score matching and a difference-in-differences analysis.Originality/valueThis study provides insight into the impact of managerial ability on earnings quality in an under-studied emerging market. Furthermore, this study broadens the existing literature about the financial consequences of a modern terrorist group, ISIS.

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Corporate policies and outcomes during the COVID-19 crisis: Does managerial ability matter?

Jebran

Chen

2022

Pacific-Basin Finance Journal

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Managerial Ability and External Financing

Cited by 4 publications

References 57 publications

The importance of managerial discretion on managerial ability–firm cash holding nexus

The importance of managerial discretion on managerial ability–firm cash holding nexus

Managerial ability, earnings quality and ISIS: evidence from Iraq

Corporate policies and outcomes during the COVID-19 crisis: Does managerial ability matter?

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