Table 4.
Managerial ability, corporate policies, and outcomes.
| Investment policies |
Financing policies |
Dividend policy |
Cash holdings policy |
Firm performance |
||||
|---|---|---|---|---|---|---|---|---|
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
|
| Variables | M&A | Investment | Short-debt leverage | Long-debt leverage | Dividend | Cash | ROA | ROE |
| Managerial ability | −0.188 | −0.155*** | −0.371** | −0.600*** | 0.0048 | −0.213* | 0.0249*** | 0.0521*** |
| (0.347) | (0.0245) | (0.148) | (0.0564) | (0.0039) | (0.118) | (0.0062) | (0.0153) | |
| Duality | −0.0337 | 0.0022 | −0.0143 | −0.0021 | −0.0001 | 0.0130* | 0.0011*** | 0.0019** |
| (0.0216) | (0.0015) | (0.0091) | (0.0035) | (0.0002) | (0.0073) | (0.0003) | (0.0009) | |
| Board | −0.0100 | −0.0003 | 0.0040 | 0.0021 | 0.0000 | 0.0050* | 0.0000 | 0.0004 |
| (0.0084) | (0.0006) | (0.0036) | (0.0013) | (0.0000) | (0.0028) | (0.0001) | (0.0003) | |
| Independence | 0.0457* | 0.0008 | 0.0043 | 0.0023 | −0.0000 | −0.0100 | −0.0001 | −0.0014 |
| (0.0265) | (0.0018) | (0.0113) | (0.0043) | (0.0003) | (0.0090) | (0.0004) | (0.0011) | |
| Institutional | 0.0019 | 0.0024 | −0.0269 | −0.0010 | 0.0018*** | 0.139*** | 0.0016** | 0.0029 |
| (0.0458) | (0.0032) | (0.0195) | (0.0074) | (0.0005) | (0.0156) | (0.0008) | (0.0020) | |
| State | −0.0249 | −0.0037** | −0.0074 | −0.0133*** | −0.0011*** | −0.0008 | −0.0030*** | −0.0053*** |
| (0.0253) | (0.0017) | (0.0107) | (0.0041) | (0.0002) | (0.0085) | (0.0004) | (0.0011) | |
| Size | −0.0065 | 0.0122*** | 0.0725*** | 0.0696*** | 0.0000 | −0.0077 | 0.0006 | −0.0000 |
| (0.0267) | (0.0018) | (0.0111) | (0.0042) | (0.0003) | (0.0090) | (0.0004) | (0.0011) | |
| Growth | 0.147*** | 0.0043** | 0.0619*** | 0.0215*** | −0.0003 | −0.0311*** | 0.0072*** | 0.0125*** |
| (0.0288) | (0.0020) | (0.0122) | (0.0046) | (0.0003) | (0.0097) | (0.0004) | (0.0012) | |
| Cash flow | −0.415*** | 0.0130 | −0.159** | −0.117*** | 0.0175*** | 0.529*** | 0.0771*** | 0.126*** |
| (0.157) | (0.0111) | (0.0666) | (0.0255) | (0.0018) | (0.0534) | (0.0027) | (0.0066) | |
| MTB | 0.0730*** | −0.0001 | 0.0442*** | 0.0152*** | 0.0008*** | 0.0099*** | 0.0012*** | 0.0028*** |
| (0.0090) | (0.0006) | (0.0038) | (0.0014) | (0.0001) | (0.0030) | (0.0001) | (0.0003) | |
| Profitability | −0.0585 | 0.0143** | −1.068*** | −0.266*** | 0.0115*** | 0.0990*** | ||
| (0.0964) | (0.0068) | (0.0380) | (0.0145) | (0.001) | (0.0327) | |||
| Leverage | −0.0810 | −0.0089** | 0.0004 | −0.291*** | −0.0185*** | 0.0170*** | ||
| (0.0574) | (0.0040) | (0.0006) | (0.0195) | (0.0009) | (0.0023) | |||
| Industry | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Time | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Constant | 0.0696 | −0.207*** | −1.245*** | −1.245*** | −0.00437 | 0.547*** | −0.0167* | −0.0301 |
| (0.479) | (0.0338) | (0.201) | (0.0768) | (0.00551) | (0.163) | (0.00859) | (0.0212) | |
| R2 | 0.016 | 0.013 | 0.210 | 0.238 | 0.150 | 0.100 | 0.269 | 0.146 |
| Observations | 11,016 | 10,818 | 11,016 | 11,016 | 9639 | 11,016 | 11,016 | 11,016 |
Notes. This table reports the main findings. Variables definitions are located in Appendix A. Standard errors in parenthesis.
*** P < 0.01, ** P < 0.05, *P < 0.1.