Managerial ability, product market competition, and firm behavior

Kenneth Yung and Trung Nguyen

International Review of Economics & Finance, 2020, vol. 70, issue C, 102-116

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.

Keywords: Managerial ability; Product market behavior; Product market competition; Investment activity; Firm value (search for similar items in EconPapers)
JEL-codes: G30 G32 G40 G41 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:70:y:2020:i:c:p:102-116

DOI: 10.1016/j.iref.2020.06.027

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