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Age diversity, firm performance and managerial ability

Qiao Xu (College of Business, University of Houston-Victoria, Victoria, Texas, USA)
Guy Dinesh Fernando (Department of Accounting and Law, University at Albany – SUNY, Albany, New York, USA)
Richard A. Schneible (School of Accounting, Seidman College of Business, Grand Valley State University, Grand Rapids, Michigan, USA)

Review of Accounting and Finance

ISSN: 1475-7702

Article publication date: 13 July 2022

Issue publication date: 28 July 2022

1205

Abstract

Purpose

The purpose of this study is to investigate the impact of the age diversity of the top management team (TMT) on firm performance and on the managerial ability of the TMT. Furthermore, this study investigates how the relationship between age diversity and firm performance is mediated by managerial ability and the contextual nature of the relationship.

Design/methodology/approach

This is an empirical study which uses regression analyses and mediation analyses to evaluate the hypotheses.

Findings

The authors observe a negative relationship between age diversity and firm performance and also between age diversity and managerial ability of the TMT. Further, the authors find that that the negative relationship between age diversity and firm performance is mediated by managerial ability. The authors also find that the relation between performance and age diversity is context specific – the negative relationship between age diversity and firm performance is ameliorated during times of financial crisis.

Social implications

In an environment where diversity is beginning to be valued, insights into the impact of different types of diversity on performance become important. Age diversity is a critical component of diversity. Therefore, insights into the impact of age diversity on performance will be of interest to managers, academics and even regulators.

Originality/value

To the best of the authors’ knowledge, this study is the first to evaluate the impact of age diversity on the market perception of firm performance of US firms using a large, comprehensive, multi-year data set. Furthermore, this is the only study to evaluate the impact of age diversity on managerial ability and show the mediating effect of managerial ability on the relationship between age diversity and firm performance.

Keywords

Citation

Xu, Q., Fernando, G.D. and Schneible, R.A. (2022), "Age diversity, firm performance and managerial ability", Review of Accounting and Finance, Vol. 21 No. 4, pp. 276-298. https://doi.org/10.1108/RAF-09-2021-0232

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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