Evaluation of Managerial Ability in the Japanese Setting

Hsihui Chang, Souhei Ishida and Takuma Kochiyama
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Hsihui Chang: Lebow College of Business, Drexel University
Souhei Ishida: Graduate School of Humanities and Social Sciences, Saitama University
Takuma Kochiyama: Graduate School of Business Administration, Hitotsubashi University

The Japanese Accounting Review, 2018, vol. 8, 1-22

Abstract: Following Demerjian, Lev, and McVay (2012), we quantify managerial ability using a sample of Japanese listed firms for the period 2005-2015. Consistent with their findings, we find that the estimated managerial ability is strongly correlated with manager fixed effects. Further, we find that the managerial ability is economically and significantly associated with the stock price reactions to CEO turnovers and changes in future return on assets following CEO turnovers. Our results are robust to alternative specifi ations of DEA models and inputs used in the estimation of firm efficiency. We contribute to the literature by generalizing the validity of the managerial ability introduced by Demerjian, Lev, and McVay (2012) to a non-US setting.

Keywords: Managerial ability; Japan; Stock returns; ROA; and CEO turnovers (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kob:tjrevi:dec2018:v:8:p:1-22

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