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The relationship between management characteristics and firm performance

The relationship between management characteristics and firm performance PurposeThis study aims to investigate the relationship between management characteristics including management capability, management entrenchment, agency costs and overconfidence and firm performance in companies listed on the Tehran Stock Exchange market.Design/methodology/approachThe research population includes 125 companies after applying systematic elimination sampling method during 2010-2016. The primary measure for companies’ performance is return on assets and Demerjian et al. (2012a) model is used to measure managerial characteristics.FindingsThe results indicated that two management characteristics, namely, management capability and overconfidence are positively associated with firm performance and improve the level of performance. Agency costs did not have any significant effect on firm performance and management entrenchment leads to deterioration in firm performance.Originality/valueThe paper focuses on managerial characteristics and firm performance, which the results may very helpful to companies and investors to hiring managers with specific characteristics. Moreover, the results may give strength to further studies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1059-5422
DOI
10.1108/CR-11-2018-0070
Publisher site
See Article on Publisher Site

Abstract

PurposeThis study aims to investigate the relationship between management characteristics including management capability, management entrenchment, agency costs and overconfidence and firm performance in companies listed on the Tehran Stock Exchange market.Design/methodology/approachThe research population includes 125 companies after applying systematic elimination sampling method during 2010-2016. The primary measure for companies’ performance is return on assets and Demerjian et al. (2012a) model is used to measure managerial characteristics.FindingsThe results indicated that two management characteristics, namely, management capability and overconfidence are positively associated with firm performance and improve the level of performance. Agency costs did not have any significant effect on firm performance and management entrenchment leads to deterioration in firm performance.Originality/valueThe paper focuses on managerial characteristics and firm performance, which the results may very helpful to companies and investors to hiring managers with specific characteristics. Moreover, the results may give strength to further studies.

Journal

Competitiveness Review: An International Business Journal incorporating Journal of Global CompetitivenessEmerald Publishing

Published: Jul 15, 2019

References

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