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Quantifying managerial ability / Peter Demerjian in Management science, Vol. 58 N° 7 (Juillet 2012) 

Public ISBD [article]  in Management science > Vol. 58 N° 7 (Juillet 2012) . - pp.1229-1248 Titre : Quantifying managerial ability : A new measure and validity tests Type de document : texte imprimé Auteurs : Peter Demerjian, Auteur ; Baruch Lev, Auteur ; Sarah McVay, Auteur Année de publication : 2012 Article en page(s) : pp.1229-1248 Note générale : Management Langues : Anglais (eng) Mots-clés : Managerial  ability  Managerial  talent  Managerial  efficiency Résumé : We propose a measure of managerial ability, based on managers' efficiency in generating revenues, which is available for a large sample of firms and outperforms existing ability measures. We find that our measure is strongly associated with manager fixed effects and that the stock price reactions to chief executive officer (CEO) turnovers are positive (negative) when we assess the outgoing CEO as low (high) ability. We also find that replacing CEOs with more (less) able CEOs is associated with improvements (declines) in subsequent firm performance. We conclude with a demonstration of the potential of the measure. We find that the negative relation between equity financing and future abnormal returns documented in prior research is mitigated by managerial ability. Specifically, more able managers appear to utilize equity issuance proceeds more effectively, illustrating that our more precise measure of managerial ability will allow researchers to pursue studies that were previously difficult to conduct. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/early/2012/03/09/mnsc.1110.1487.abstra [...] [article] Quantifying managerial ability : A new measure and validity tests [texte imprimé] / Peter Demerjian, Auteur ; Baruch Lev, Auteur ; Sarah McVay, Auteur . - 2012 . - pp.1229-1248. Management Langues : Anglais (eng) in Management science > Vol. 58 N° 7 (Juillet 2012) . - pp.1229-1248 Mots-clés : Managerial  ability  Managerial  talent  Managerial  efficiency Résumé : We propose a measure of managerial ability, based on managers' efficiency in generating revenues, which is available for a large sample of firms and outperforms existing ability measures. We find that our measure is strongly associated with manager fixed effects and that the stock price reactions to chief executive officer (CEO) turnovers are positive (negative) when we assess the outgoing CEO as low (high) ability. We also find that replacing CEOs with more (less) able CEOs is associated with improvements (declines) in subsequent firm performance. We conclude with a demonstration of the potential of the measure. We find that the negative relation between equity financing and future abnormal returns documented in prior research is mitigated by managerial ability. Specifically, more able managers appear to utilize equity issuance proceeds more effectively, illustrating that our more precise measure of managerial ability will allow researchers to pursue studies that were previously difficult to conduct. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/early/2012/03/09/mnsc.1110.1487.abstra [...]