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Managerial ability, product market competition, and firm behavior

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  • Yung, Kenneth
  • Nguyen, Trung

Abstract

We examine the relation between managerial ability and firm behavior in the face of product market competition. We find that managerial ability is positively associated with market share growth. When facing competitive threats, high-ability managers invest more in research and development relative to capital expenditures. In addition, managerial ability enhances firm value in the face of competition. Collectively, our results suggest that managerial ability is beneficial to the firm facing competitive threats. Our results remain robust after controlling for endogeneity issues and managerial overconfidence, and using alternative measures of managerial ability.

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  • Yung, Kenneth & Nguyen, Trung, 2020. "Managerial ability, product market competition, and firm behavior," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 102-116.
    • Handle: RePEc:eee:reveco:v:70:y:2020:i:c:p:102-116
    DOI: 10.1016/j.iref.2020.06.027
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    More about this item

    Keywords

    Managerial ability; Product market behavior; Product market competition; Investment activity; Firm value;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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