Proving their mettle: Managerial ability and firm performance in trying times

Authors

Barry Hettler
James Cordeiro
Arno Forst, The University of Texas Rio Grande ValleyFollow

Document Type

Article

Publication Date

4-2024

Abstract

This study investigates the impact of trying economic times, i.e., periods of economic decline and uncertainty, on managerial ability. We find that trying economic times positively moderate the association between managerial ability and firm profitability. Consistent with these primary findings, we also find that the positive moderating role of economic decline and uncertainty on the ability-performance relationship is most salient in procyclical industries. Our results are robust across multiple measures of economically trying times and managerial ability. Further analyses indicate that in trying times more capable managers generate stronger performance through both improved asset turnover and profit margins.

Comments

Original published version available at https://doi.org/10.1016/j.jcae.2023.100393

Recommended Citation

Hettler, B., Cordeiro, J. and Forst, A., 2024. Proving their mettle: Managerial ability and firm performance in trying times. Journal of Contemporary Accounting & Economics, 20(1), p.100393. https://doi.org/10.1016/j.jcae.2023.100393

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Journal of Contemporary Accounting and Economics

DOI

10.1016/j.jcae.2023.100393