Does managerial ability matter in corporate sustainability-related dynamics? An empirical investigation
-
Author(s)Oleh PaskoLink to ORCID Index: https://orcid.org/0000-0002-6275-5885
,
Li ZhangLink to ORCID Index: https://orcid.org/0000-0002-4837-8630
,
Edward Markwei MarteyLink to ORCID Index: https://orcid.org/0000-0003-0468-9223
,
Tetyana KutsLink to ORCID Index: https://orcid.org/0000-0002-8389-6070
,
Linus Baka JoshuaLink to ORCID Index: https://orcid.org/0009-0009-3260-534X
-
DOIhttp://dx.doi.org/10.21511/ppm.22(1).2024.12
-
Article InfoVolume 22 2024, Issue #1, pp. 128-146
- Cited by
- 409 Views
-
110 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study aims to assess the intricate interplays between managerial ability, corporate social responsibility (CSR), and firm value, focusing on 3,498 company-year observations sourced from the RANKINS CSR RATINGS and China Stock Market & Accounting Research (CSMAR) databases representing China’s Shanghai and Shenzhen A-share listed companies from 2009 to 2018. Employing a rigorous sample selection process and utilizing data from reliable databases, the research employs a comprehensive methodology to explore the intricate corporate sustainability-related dynamics influencing organizational success and societal impact.
The findings reveal a compelling negative correlation between managerial ability and CSR performance, corroborating previous research and suggesting potential challenges in reconciling managerial competence with social responsibility priorities. Furthermore, this paper establishes a negative correlation between CSR and firm value, with managerial ability influencing the magnitude of this impact, underscoring the significance of managerial skills in moderating the relationship between CSR initiatives and overall corporate performance. Moreover, the study uncovers a robust positive correlation between managerial ability and firm value, emphasizing the pivotal role of adept leadership in achieving higher corporate valuation.
It provides valuable insights for practitioners, policymakers, and scholars, creating a conducive environment for well-informed decision-making. In the ever-changing corporate landscape, a deep understanding of these interconnections is essential to nurture business practices that are both sustainable and value-oriented.
Acknowledgment
This paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “Embracing EU corporate social responsibility: challenges and opportunities of business-society bonds transformation in Ukraine” – 101094100 — EECORE – ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA/ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/
Oleh PASKO expresses sincere gratitude for the support from the Kirkland Research Program, generously provided by the Leaders of Change Foundation established by the Polish-American Freedom Foundation.
- Keywords
-
JEL Classification (Paper profile tab)G34, M14, M41
-
References35
-
Tables11
-
Figures0
-
- Table 1. Sample selection procedure
- Table 2. Variable definition
- Table 3. Descriptive statistics
- Table 4. Regression analysis І
- Table 5. Regression analysis ІІ
- Table 6. Regression analysis ІІІ
- Table A1. Correlation matrix
- Table A2. Regression analysis ІV
- Table A3. Regression analysis V
- Table A4. Robustness test І
- Table A5. Robustness test ІІ. Lead-lag approach
-
- Aguilera, R., Duran, P., Heugens, P. P. M. A. R., Sauerwald, S., Turturea, R., & VanEssen, M. (2021). State ownership, political ideology, and firm performance around the world. Journal of World Business, 56(1), 101113.
- Amirteimoori, A., Banker, R. D., Zadmirzaei, M., & Susaeta, A. (2023). Managerial ability and productivity growth in the European forest sector. European Journal of Forest Research, 142(5), 1029-1043.
- Andreou, P. C., Karasamani, I., Louca, C., & Ehrlich, D. (2017). The impact of managerial ability on crisis-period corporate investment. Journal of Business Research, 79, 107-122.
- Atawnah, N., Eshraghi, A., Baghdadi, G. A., & Bhatti, I. (2024). Managerial ability and firm value: A new perspective. Research in International Business and Finance, 67, 102133.
- Bae, S. C., Kwon, T. H., & Liu, C. (2024). The impact of high-pressure political reforms on state-owned enterprises: Evidence from China. International Review of Financial Analysis, 91, 103006.
- Bazrafshan, A., Makarem, N., Hesarzadeh, R., & SalmanAbbood, W. (2023). Managerial ability, earnings quality and ISIS: Evidence from Iraq. International Journal of Emerging Markets, 18(9), 3085-3115.
- Bui, D. G., Chen, Y., Chen, Y.-S., & Lin, C.-Y. (2023). Managerial ability and financial statement disaggregation decisions. Journal of Empirical Finance, 74, 101427.
- Chen, H., Ho, K.-C., Zhang, M., & Zhang, Q. (2023). Effect of managerial ability toward corporate social responsibility on enterprise default risk. Finance Research Letters, 54, 103700.
- Chen, S.-S., Huang, C.-W., & Lin, C.-Y. (2023). Does CEO general managerial ability matter in M&A voting? The Quarterly Review of Economics and Finance, 92, 14-24.
- Cheng, H., Peng, X., & Chai, X. (2020). Can managerial ability enhance corporate social responsibility? An empirical evidence based on linear regression analysis. 2020 2nd International Conference on Economic Management and Model Engineering (ICEMME) (pp. 68-71). Chongqing, China.
- Cheng, L., & Cheung, A. (W.). (2021). Is there a dark side of managerial ability? Evidence from the use of derivatives and firm risk in China. Journal of Contemporary Accounting & Economics, 17(2), 100258.
- Cho, H., Choi, G., & Choi, S. (2021). Is managerial ability associated with capital structure adjustment speed? Asia-Pacific Journal of Financial Studies, 50(3), 308-333.
- Chronopoulos, P. (2022). Do socially responsible managers forecast sales more accurately? Journal of Financial Reporting and Accounting, 20(3/4), 734-752.
- Daradkeh, H., Shams, S., Bose, S., & Gunasekarage, A. (2023). Does managerial ability matter for corporate climate change disclosures? Corporate Governance: An International Review, 31(1), 83-104.
- Demerjian, P., Lev, B., & McVay, S. (2012). Quantifying managerial ability: A new measure and validity tests. Management Science, 58(7), 1229-1248.
- García-Sánchez, I., & Martínez-Ferrero, J. (2019). Chief executive officer ability, corporate social responsibility, and financial performance: The moderating role of the environment. Business Strategy and the Environment, 28(4), 542-555.
- García-Sánchez, I., Aibar-Guzmán, B., Aibar-Guzmán, C., & Azevedo, T. (2020). CEO ability and sustainability disclosures: The mediating effect of corporate social responsibility performance. Corporate Social Responsibility and Environmental Management, 27(4), 1565-1577.
- García-Sánchez, I.-M., Hussain, N., & Martínez-Ferrero, J. (2019). An empirical analysis of the complementarities and substitutions between effects of CEO ability and corporate governance on socially responsible performance. Journal of Cleaner Production, 215, 1288-1300.
- Giannetti, M., Liao, G., You, J., & Yu, X. (2021). The externalities of corruption: Evidence from entrepreneurial firms in China. Review of Finance, 25(3), 629-667.
- Gong, Y., Yan, C., & Ho, K. (2021). The effect of managerial ability on corporate social responsibility and firm value in the energy industry. Corporate Social Responsibility and Environmental Management, 28(2), 581-594.
- Hmaittane, A., Bouslah, K., M’Zali, B., & Ibariouen, I. (2022). Corporate sustainability and cost of equity capital: Do managerial abilities matter? Sustainability, 14(18), 11363.
- Huang, Q., & Xiong, M. (2023). Does managerial ability increase or decrease firm value? Applied Economics Letters, 30(13), 1717-1722.
- Huang, Q., Xiong, M., & Xiao, M. (2022). Does managerial ability affect corporate financial constraints? Evidence from China. Economic Research-Ekonomska Istraživanja, 35(1), 3731-3753.
- Huynh, N., Le, Q. N., & Tran, Q. T. (2024). Firm-level political risk and intellectual capital investment: Does managerial ability matter? International Review of Financial Analysis, 91, 103020.
- Inam Bhutta, A., Sheikh, M. F., Munir, A., Naz, A., Saif, I., & Ntim, C. G. (rev. ed.). (2021). Managerial ability and firm performance: Evidence from an emerging market. Cogent Business & Management, 8(1), 1879449.
- Jiang, M., Xu, X., & Yang, J. (2023). Opportunity for whom: Economic policy uncertainty, managerial ability and firm value. Applied Economics Letters, 30(16), 2220-2223.
- Park, W., & Byun, C. (2021). Effect of SME’s managerial ability and executive compensation on firm value. Sustainability, 13(21), 11828.
- Pasko, O., Chen, F., Proskurina, N., Mao, R., Gryn, V., & Pushkar, I. (2021). Are corporate social responsibility active firms less involved in earnings management? Empirical evidence from China. Business: Theory and Practice, 22(2), 504-516.
- Pasko, O., Lagodiienko, N., Kudlaieva, N., Riabenko, L., & Gerasymenko, N. (2022). Does corporate governance moderate the effect of corporate social responsibility on a firm’s financial performance? Problems and Perspectives in Management, 20(4), 588-601.
- Pasko, O., Marenych, T., Diachenko, O., Levytska, I., & Balla, I. (2021). Stakeholder engagement in sustainability reporting: the case study of Ukrainian public agricultural companies. Agricultural and Resource Economics: International Scientific E-Journal, 7(1), 58-80.
- Pasko, O., Yang, Z., Tkachenko, V., Proskurina, N., & Pushkar, I. (2022). Does female representation on corporate boards boost the strengthening of internal control in socially responsible firms? Investment Management and Financial Innovations, 19(4), 294-308.
- Pasko, O., Zhang, L., Tuzhyk, K., Proskurina, N., & Gryn, V. (2021). Do sustainability reporting conduct and corporate governance attributes relate? Empirical evidence from China. Problems and Perspectives in Management, 19(4), 110-123.
- Qian, K., Liang, X., & Liu, X. (2023). Managerial ability, managerial risk taking and innovation performance. Finance Research Letters, 57, 104193.
- Raboshuk, A., Zakharov, D., Lehenchuk, S., Morgulets, O., & Hryhorevska, O. (2023). The relationship between corporate governance mechanisms and financial performance: The case of listed industrial companies in Oman. Investment Management and Financial Innovations, 20(2), 244-255.
- Veltri, S., D’Orio, G., & Bonanno, G. (2016). Measuring managerial ability using a two-stage SFA-DEA approach. Knowledge and Process Management, 23(4), 247-258.
-
The relationship between corporate social responsibility and earnings management: accounting for endogeneity
Hyunjung Choi , Byungchul Choi ,
Jungyoon Byun
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.06
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 69-84 Views: 4662 Downloads: 550 TO CITE АНОТАЦІЯThis study examines the relationship between corporate social responsibility (CSR) and earnings management after controlling for endogeneity of CSR. Using a sample of non-financial firms listed on Korean Securities Market between 2002 and 2010, this study finds that ignoring endogeneity biases the estimated relation between CSR and earnings management. Specifically, the results show that the negative and significant relation between CSR commitment and discretionary accruals reported in the previous studies becomes insignificant. However, the negative and significant relation between CSR commitment and real activities manipulation remains significant even when the endogeneity of CSR commitment is taken into account. Therefore, this study provides evidence that proactive CSR engagement significantly affects firm’s practice of real activities manipulation, while it does not affect its practice of discretionary accruals. These results indicate that CSR commitment leads managers to be more responsible in management of operational activities than in accruals management.
-
Does board composition have an impact on CSR reporting?
Patrick Velte
doi: http://dx.doi.org/10.21511/ppm.15(2).2017.02
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4525 Downloads: 1725 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
-
Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan
Ashraf Mohammad Salem Alrjoub ,
Muhannad Akram Ahmad
doi: http://dx.doi.org/10.21511/imfi.14(3).2017.01
Investment Management and Financial Innovations Volume 14, 2017 Issue #3 pp. 4-14 Views: 2856 Downloads: 2082 TO CITE АНОТАЦІЯSeveral studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.
