Is management quality value relevant?
Agarwal, Vineet, Taffler, Richard J. and Brown, Mike. (2011) Is management quality value relevant? Journal of Business Finance & Accounting, 38 (9-10). pp. 1184-1208. ISSN 0306-686XFull text not available from this repository.
Official URL: http://dx.doi.org/10.1111/j.1468-5957.2011.02267.x
Using a unique database of management quality ratings over a 17 year period, we find that while good management appears to be associated with lower subsequent market returns, this is entirely consistent with an informationally efficient market. Quality of management is value relevant in that better managed firms have lower cost of equity, more stable earnings, higher profitability that persists over time, and higher market valuations using the Ohlson (1995 and 2001) method. Potentially endogenous relationships are unlikely to be driving our results. While well managed firms are good firms, contrary to the belief of many market participants their stocks perform no better than those of poorly managed firms.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management|
|Divisions:||Faculty of Social Sciences > Warwick Business School > Finance Group
Faculty of Social Sciences > Warwick Business School
|Journal or Publication Title:||Journal of Business Finance & Accounting|
|Publisher:||Wiley-Blackwell Publishing Ltd.|
|Page Range:||pp. 1184-1208|
|Access rights to Published version:||Restricted or Subscription Access|
Actions (login required)