| Popis: |
We use the financial crisis as a natural experiment to investigate the impact of managerial ability on corporate investment for 2747 U.S. non-financial firms. We find a positive relation between pre-crisis managerial ability and crisis period investments. This occurs because of the capacity of firms with higher pre-crisis managerial ability to secure greater financing and to keep their firms less vulnerable to financial constraints, which in turn help mitigate severe underinvestment problems evident during the financial crisis. Interestingly, the positive relation between managerial ability and investment holds only for firms with CEOs who have general managerial skills rather than firm-specific skills. Finally, we find that the stock market positively evaluates crisis period investments, yet this effect is solely evident among firms characterized by high levels of pre-crisis managerial ability. |
