Firms performance, risk taking and managerial ability

Alex Johanes Simamora

International Journal of Productivity and Performance Management, 2021, vol. 72, issue 3, 789-808

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.

Keywords: Risk taking; Managerial ability; Firms' performance (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijppmp:ijppm-03-2021-0172

DOI: 10.1108/IJPPM-03-2021-0172

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