Regulatory Oversight and Managerial Ability
Hesarzadeh, R. (2020). Regulatory oversight and managerial ability. Eurasian Business Review, 10(4), 559–585. doi:10.1007/s40821-020-00150-0
Posted: 24 Apr 2020 Last revised: 4 Nov 2020
Date Written: April 1, 2020
I examine whether regulatory oversight affects managerial ability. To measure regulatory oversight, I use comment letters from two Iranian regulatory agencies. Furthermore, to measure managerial ability, I employ managerial ability-score introduced by Demerjian et al. (Management Science 58(7):1229–1248, 2012). Using a difference-in-differences design with a propensity score matching approach, I reveal that the managerial ability of a firm is enhanced following the receipt of a comment letter by the firm. I further reveal that the managerial ability of a firm is enhanced following the receipt of a comment letter by the firm’s industry peers. Collectively, the findings highlight the internalities and externalities of regulatory oversight in the context of managerial ability.
Keywords: Regulatory oversight, Managerial ability, Spillover effect, Difference-in-differences design, Emerging capital market
JEL Classification: G32, M42, M48
Suggested Citation: Suggested Citation