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Firms performance, risk taking and managerial ability

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  • Alex Johanes Simamora

Abstract

Purpose - This research aims to examine the moderating role of managerial ability on the relationship between risk-taking behavior and firms' performance. Design/methodology/approach - This research uses 383 manufacturing firm-years listed on the Indonesian Stock Exchange as the research sample. The hypothesis test uses fixed-effect regression analysis. Findings - The result shows that risk-taking behavior has a positive effect on firms' performance for higher managerial ability. Managerial ability provides higher knowledge, skill and information to get benefits and mitigate costs of risk-taking behavior to improve firms' performance. The role of managerial ability to make risk-taking behavior increase firms' performance occurs more for high-ability managers, dual CEO, shareholder-CEO and family CEO. Originality/value - This research contributes to answering the conflicting arguments and filling the previous findings gap between risk-taking behavior and firm performance by considering managerial ability as a factor to create effective risk mitigation.

Suggested Citation

  • Alex Johanes Simamora, 2021. "Firms performance, risk taking and managerial ability," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 72(3), pages 789-808, August.
    • Handle: RePEc:eme:ijppmp:ijppm-03-2021-0172
    DOI: 10.1108/IJPPM-03-2021-0172
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