Managerial ability and goodwill impairment: evidence from China

PurposeThis research aims to examine the moderating role of green chief executive officer (CEO) in the effect of managerial ability (MA) on environmental performance (ENV).Design/methodology/approachThis research’s sample consists of 197 manufacturing firm-years that are listed on the Indonesian Stock Exchange and the Program Penilaian Peringkat Kinerja Perusahaan Dalam Pengelolaan Lingkungan Hidup (PROPER) participants. Data analysis use industry- and year-effect regression analysis.FindingsThe result shows that MA improves ENV when led by a green CEO. It indicates that a green CEO with higher MA considers environmental responsibilities as a valuable investment to create business competitive advantages and sustainability.Research limitations/implicationsFirst, this research only uses the PROPER participants as the research sample. Second, by nature, MA measurement errors might still exist because it is hard to determine the MA with qualitative factors. Third, this research does not split the environmental responsibilities into a wider spectrum, such as environmental–business, environmental–regulation or environmental–ethical spectrum.Originality/valueThis research provides new evidence that higher MA by green CEO increases ENV in Indonesia. This research also gives a contribution to fill the inconsistent previous findings of MA and ENV.

Managerial ability and analysts’ stock recommendations

This study assesses whether new chief executive officers (CEOs) or CEOs in their early tenure carry out goodwill impairments more intensively than senior CEOs. Further, it investigates the relationship between cost of capital and goodwill, as well as whether companies that report goodwill and are audited by a Big 4 auditor display lower cost of capital. The findings show that a change in CEO does not significantly lead to higher goodwill impairments. Using Austria as a case study, the study finds that, in the years of their early tenure, CEOs in Austria generally do not adopt goodwill impairment‐related opportunistic behaviours. This study indicates that companies that have carried out goodwill impairment tend to display higher cost of capital, reflecting the potential uncertainty about their future prospects and cash generating ability. The findings show that companies that report goodwill and are audited by a Big 4 auditor tend to display lower cost of capital.

The new prudential regulation framework, established by the European Central Bank (ECB) after the financial crisis encompasses supervisory procedures to measure and monitor bank business models, capital requirements, governance arrangements and liquidity risk. However, research on financial stability has revealed that, during financial crises, it would have been essential to monitor the vulnerability of banks by also assessing the value of their intangible assets. We contribute to the extant literature by examining the impact of a specific intangible asset—namely, managerial ability—on bank risk-taking. Given the interest of the regulatory authority in monitoring financial stability, we quantify management ability and document its double effects on bank risk-taking: the indirect effect through franchise value and its direct effect. We examine a sample of listed banks from 15 EU countries over the period 1997–2016. We find that higher managerial ability is associated with higher franchise value, contributing to a decrease in bank risk-taking (indirect effect), particularly for small banks and during financial crisis. Moreover, managerial ability reduces bank risk-taking through its direct effect. Our evidence suggests that managerial ability could be considered a measure (easily estimated) for regulating the disciplinary role of franchise value and, used in combination with current regulatory measures, could lead to supervisors achieving more effective management oversight.

Purpose This study examines the moderating effect of XBRL mandatory adoption on the association between managerial ability and corporate tax outcomes.Design/methodology/approach This study used a quantitative method with panel data regression models using a sample of listed firms on the Indonesia Stock Exchange from 2010 to 2019.Findings The regression results indicate that XBRL adoption moderates the relationship between managerial ability on tax avoidance and tax risk. Firms with higher managerial ability have relatively greater tax avoidance practices and lower tax risk following XBRL adoption. In this study, the authors document unfavorable and unexpected consequences of XBRL in an emerging country.Research limitations/implications Results are from a sample of firms from one emerging country.Practical implications It becomes important and necessary to develop more and better taxonomies with standardized extensions related to taxes information in the XBRL financial reporting to support the tax administrator’s performance in assessing firms’ tax avoidance and tax risk. The authors underscore the importance of improving taxes tags, including tags from financial statements and the disclosure section. This study may also inform policymakers in other countries that more adequate tax tags are needed to leverage benefit from XBRL adoption in monitoring and assessing corporate tax avoidance and tax risk.Originality/value This study is among the first to test an explanation for the moderating role of XBRL adoption on the association between managerial ability and corporate tax avoidance and tax risk.

Recent surveys indicate that America's chief executive officers (CEOs) are getting older. While aging is often associated with greater experience, improved skill sets and higher job performance, prior research warns that aging can also lead to a significant decrease in cognitive function, energy, ambition and, consequently, the ability of CEOs to manage their firms. We examine this issue and find that older CEOs display significantly lower managerial ability as compared to younger CEOs. Exploring differences in firm factors, we further find that older CEOs exhibit significantly lower managerial ability when managing high‐technology firms and significantly higher managerial ability when managing more mature, highly regulated firms. Collectively, our study provides new evidence that while managerial ability decreases with age, firm characteristics significantly moderate this relationship.

Are voluntary internal control weakness disclosures in initial public offerings associated with managerial ability and subsequent financial reporting quality?

Effective decision-making relies on access to timely and accurate information, which is widely regarded as a valuable asset in the capital market. Accounting information is no exception, and it is critical for managers to provide such information promptly to advance their firms' economic activities. This study investigates the relationship between managers' ability and the timeliness of financial reporting, testing three research hypotheses through linear regression analysis. The statistical population comprises 115 firms listed on the Tehran Stock Exchange between 2012 and 2021, with 1150 firm-year observations. The delay in the auditor's report serves as a proxy for financial reporting timeliness. Managers' abilities are measured using Demerjian et al.'s model [1]. The findings reveal a significant, positive relationship between managerial ability and the timeliness of financial reporting, indicating that higher managerial ability is associated with lower financial reporting delay. Additionally, the results suggest that the relationship between managerial ability and financial reporting timeliness is moderated by the size of the auditing firm and the firm itself.

This study examines a sample of manufacturing firms in order to assess the relationship between overproduction levels with different levels of managerial ability. Using the managerial ability measure developed by Demerjian et al. (2012), this paper shows that firms with high levels of managerial ability have smaller size of overproduction. Furthermore, when overproduction occurs in firms with high levels of managerial ability, it is less likely to reverse in the following year and is more likely to be associated with future sales increases. Overall, the results suggest that high managerial ability firms generally avoid overproduction. High‐ability managers having fewer overproduction reversals suggest that they are less likely to use overproduction to manage earnings; instead, they are more likely to overproduce to build up inventory to expect higher future sales.

Using a scoring template to identify intervention goals for adolescent social communication interventions.

هدف البحث: قياس أثر العلاقة التفاعلية بين المقدرة الإدارية وممارسات إدارة الأرباح على مستوى الإحتفاظ بالنقدية فى الشركات غير المالية المقيدة بالبورصة المصرية. منهجية البحث: اعتمدت الدراسة على المنهج الوصفى التحليلى والذى يجمع بين كل من التحليل النظرى لأهم الأدبيات المختلفة ذات العلاقة بموضوع البحث، وأيضاً إجراء دراسة تطبيقية اعتمدت على مدخل تحليل المحتوى فى فحص البيانات التاريخية الفعلية بالقوائم المالية السنوية، لعينة من (128) شركة من الشركات غير المالية المقيدة بالبورصة المصرية خلال الفترة من عام 2010 حتى عام 2020م، بإجمالى عدد مشاهدات 1408 مشاهدة، لاختبار فروض البحث والتى تعكس أثر العلاقة التفاعلية بين المقدرة الإدارية وممارسات إدارة الأرباح على مستوى الإحتفاظ بالنقدية، وذلك باستخدام مجموعة من الأساليب الإحصائية والتى تتمثل فى؛ معامل ارتباط بيرسون ونموذج الانحدار الخطى. نتائج البحث: أوضحت نتائج الدراسة التطبيقية؛ أولاً: وجود تأثير إيجابى ومعنوى للمقدرة الإدارية على إدارة الأرباح باستخدام الاستحقاق المحاسبى فى الشركات غير المالية المقيدة بالبورصة المصرية. ثانياً: وجود تأثير سلبى ومعنوى للمقدرة الإدارية على إدارة الأرباح باستخدام الأنشطة الحقيقية فى الشركات غير المالية المقيدة بالبورصة المصرية. ثالثاً: وجود تأثير إيجابى ومعنوى للمقدرة الإدارية على مستوى الإحتفاظ بالنقدية فى الشركات غير المالية المقيدة بالبورصة المصرية. رابعاً: عدم وجود تأثير معنوى للعلاقة التفاعلية بين المقدرة الإدارية وإدارة الأرباح باستخدام الاستحقاق المحاسبى على مستوى الإحتفاظ بالنقدية فى الشركات غير المالية المقيدة بالبورصة المصرية. خامسا: وجود تأثير سلبى ومعنوى للعلاقة التفاعلية بين المقدرة الإدارية وإدارة الأرباح باستخدام الأنشطة الحقيقية على مستوى الإحتفاظ بالنقدية فى الشركات غير المالية المقيدة بالبورصة المصرية. الأصالة والإضافة العلمية للبحث: تظهر المساهمة العلمية للبحث فى تناوله لإحدى القضايا الجدلية التى شكلت محوراً لاهتمام البحث المحاسبى الأكاديمى، وهى قضية ممارسات إدارة الأرباح وعلاقتها بكل من المقدرة الإدارية ومستوى الإحتفاظ بالنقدية، خاصة فى ظل عدم اهتمام أى من الدراسات السابقة ذات الأدلة التطبيقية– فى حدود ما اطلعت عليه الباحثة – بالتناول المباشر والتفصيلى لأثر العلاقة التفاعلية بين المقدرة الإدارية وممارسات إدارة الأرباح على مستوى الإحتفاظ بالنقدية فى الشركات غير المالية المقيدة بالبورصة المصرية. كما يعد هذا البحث استكمالاً للبحوث المرتبطة بأسواق المال ونجاح الشركات فى استمرارية نشاطها، وبالتالى يمكن للمستثمرين ومديرى الشركات وغيرهم من أصحاب المصالح الاستفادة من نتائجه فى ترشيد قراراتهم المالية والاستثمارية.

Goodwill Impairment and Managerial Ability

Dynamic balancing of game difficulty can help cater for different levels of ability in players. However, performance in some game tasks depends on not only the player's ability but also their desire to take risk. Taking or avoiding risk can offer players its own reward in a game situation. Furthermore, a game designer may want to adjust the mechanics differently for a risky, high ability player, as opposed to a risky, low ability player. In this work, we describe a novel modelling technique known as particle filtering which can be used to model various levels of player ability while also considering the player's risk profile. We demonstrate this technique by developing a game challenge where players are required to make a decision between a number of possible alternatives where only a single alternative is correct. Risky players respond faster but with more likelihood of failure. Cautious players wait longer for more evidence, increasing their likelihood of success, but at the expense of game time. By gathering empirical data for the player's response time and accuracy, we develop particle filter models. These models can then be used in real-time to categorise players into different ability and risk-taking levels.

The study mainly examined the effect of chief executive officers’ attribute on tax avoidance of listed non-financial firms in Nigeria. To achieve this objective, this study specifically tests the hypothesis that chief executive officers’ attributes in the context of chief executive officers’ tenure, chief executive officers’ ownership, chief executive officers’ gender and chief executive officers’ nationality significantly affects tax avoidance over a 10year time frame (2012 – 2021) for non-financial listed firms in Nigeria. This study is anchored on the Upper Echelon Theory noting that the key concept of the upper echelon theory is that the company reflects its chief executive officer. Robust regression analysis technique was employed to test the formulated hypotheses after fulfilling the necessary conditions for obtaining non-spurious regression estimates. Specifically, the result reveals mixed evidence suggesting that the effect of chief executive officers’ attribute on tax avoidance depends on the observed or unobserved traits. Particularly, the result suggests that higher ownership rights owned by the chief executive officer reduces the level of tax avoidance of listed non-finance firms in Nigeria. Therefore, this study recommends among others that to optimize the non-debt tax saving strategy, management must develop a culture within the organization that values responsible tax planning and encourages chief executive officers’ to actively consider the non-debt tax shield as a strategic tool. Further, management team should promote transparency and open communication about tax strategies, ensuring that tax planning is integrated into overall business decision-making processes.
 Keywords: Chief Executive Officer Attribute, Tax Avoidance, Robust Regression, Upper Echelon Theory.

PurposeIn this paper, the author attempts to answer an important question upon founder-CEOs' exiting: How do they sell their remaining ownership shares? The literature has largely been silent on this question, and therefore is missing an important piece of the puzzle on the final stage of the founding entrepreneurs' involvement in their companies.Design/methodology/approachThe author uses both theoretical models and empirical methods to examine how founder-CEOs sell their remaining ownership shares.FindingsThe author finds that founder-CEOs of high-growth firms and those with high managerial ability are more likely to sell remaining ownership shares gradually rather than suddenly. Moreover, if either the growth or the managerial ability is high, founder-CEOs managing firms with high volatility tend to sell gradually.Originality/valueThis paper provides insights into the final stage of founding entrepreneurs' involvement in companies. The methodology of pattern recognition also helps investors and regulators in tracking and monitoring stock trading of founders and other company insiders.