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Managerial ability and corporate investment opportunity

Author

Listed:
  • Lee, Chien-Chiang
  • Wang, Chih-Wei
  • Chiu, Wan-Chien
  • Tien, Te-Sheng

Abstract

This study examines whether firms operated by superior managers can obtain more favorable investment opportunities using data on U.S. industrial firms during 1988–2015. The empirical results disclose that there exists a positive relationship between managerial ability and investment opportunity, and that the relation is only significant in financially unconstrained firms or firms in a strong financial position. Overall, our findings support that firms having managers with superior ability could gain more economic profits via better investment opportunity. Through our research, policy makers and investors can pay more attention on managerial ability.

Suggested Citation

  • Lee, Chien-Chiang & Wang, Chih-Wei & Chiu, Wan-Chien & Tien, Te-Sheng, 2018. "Managerial ability and corporate investment opportunity," International Review of Financial Analysis, Elsevier, vol. 57(C), pages 65-76.
    • Handle: RePEc:eee:finana:v:57:y:2018:i:c:p:65-76
    DOI: 10.1016/j.irfa.2018.02.007
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    More about this item

    Keywords

    Managerial ability; Investment opportunity; Financial unconstrained;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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