Does managerial ability increase or decrease firm value?

Abstract

ABSTRACT Recent studies have revealed the bright side and dark side of managerial ability, while its effect on firm value remains unclear. We find that managerial ability is positively associated with firm value, and the association is positively (negatively) moderated by ownership concentration (firm size and board independence). Moreover, the positive effect of managerial ability on firm value is greater with increased economic policy uncertainty. Overall, our findings highlight the importance of superior managers in enhancing firm value, especially in challenging environment.