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The relationship between management characteristics and firm performance

Mahdi Salehi (Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran)
Samaneh Mohammadi Moghadam (Economics and Administrative Sciences, Qaenat Branch, Islamic Azad University, Gaenat, Iran)

Competitiveness Review

ISSN: 1059-5422

Article publication date: 15 July 2019

Abstract

Purpose

This study aims to investigate the relationship between management characteristics including management capability, management entrenchment, agency costs and overconfidence and firm performance in companies listed on the Tehran Stock Exchange market.

Design/methodology/approach

The research population includes 125 companies after applying systematic elimination sampling method during 2010-2016. The primary measure for companies’ performance is return on assets and Demerjian et al. (2012a) model is used to measure managerial characteristics.

Findings

The results indicated that two management characteristics, namely, management capability and overconfidence are positively associated with firm performance and improve the level of performance. Agency costs did not have any significant effect on firm performance and management entrenchment leads to deterioration in firm performance.

Originality/value

The paper focuses on managerial characteristics and firm performance, which the results may very helpful to companies and investors to hiring managers with specific characteristics. Moreover, the results may give strength to further studies.

Keywords

Citation

Salehi, M. and Moghadam, S.M. (2019), "The relationship between management characteristics and firm performance", Competitiveness Review, Vol. 29 No. 4, pp. 440-461. https://doi.org/10.1108/CR-11-2018-0070

Publisher

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Emerald Publishing Limited

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