Valuing Talent: Do CEOs’ Ability and Discretion Unambiguously Increase Firm Performance

57 Pages Posted: 11 Nov 2016 Last revised: 16 Nov 2016

See all articles by Kwok Tong Samuel Cheung

Kwok Tong Samuel Cheung

Deakin University

Dharmendra Naidu

Monash University - Department of Accounting

Farshid Navissi

Monash University

Kumari Ranjeeni

Monash University - Department of Accounting

Date Written: November 10, 2016

Abstract

This study investigates how the association between more able managers and firm performance, documented in prior research, is affected by the joint effect of managerial discretion and monitoring quality. We find that higher levels of managerial discretion afford more able managers to further improve firm outcomes only when such discretion is monitored closely to curb more able managers’ rent seeking incentives. Our results are robust to a battery of additional and sensitivity analyses that we perform.

Keywords: Firm performance, CEO ability, Discretion, Business strategy, Monitoring

JEL Classification: G12, G32, G34

Suggested Citation

Cheung, Kwok Tong Samuel and Naidu, Dharmendra and Navissi, Farshid and Ranjeeni, Kumari, Valuing Talent: Do CEOs’ Ability and Discretion Unambiguously Increase Firm Performance (November 10, 2016). Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2867631

Kwok Tong Samuel Cheung

Deakin University ( email )

Building LB, Level 3
Deakin Business School, Burwood Campus
Melbourne, Victoria 3125
Australia

Dharmendra Naidu (Contact Author)

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

Farshid Navissi

Monash University ( email )

Building H, Caulfield Campus
Melbourne, Victoria 3142 Vic 3145
Australia
+61 405 664941 (Phone)

Kumari Ranjeeni

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

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