Managerial ability and investment decisions: Evidence from Chinese market

Abstract

Policymakers/researchers have developed a lot of theories and empirics to study issues related to investment policy. The current study investigcates in detail the managerial role in a firm's investment decision. This study is evident that the relationship is more profound for the firms that are large and financially unconstrained and have a strong balance sheet position. For economic constraints, the effect for SO firms is more pertinent than non‐state‐owned (NSO) firms, and the negative effect of competition and recession is decreased by high ability managers. For mitigating the effect of endogeneity and getting robust results, a propensity score matching approach is to be used.