Three essays on risk management and corporate finance
Loading...
Authors
Gao, Tianjiao
Issue Date
2014-05
Type
Electronic thesis
Thesis
Thesis
Language
ENG
Keywords
Management
Alternative Title
Abstract
In the third essay, we focus on the topic of managerial ability and its impact on the value of firm through cash holdings. We compare firm value and cash policy of firms with high managerial ability with those with relatively low managerial ability. The finding indicates that superior managers can significantly increase cash value: a dollar of cash is worth 0.289 dollars more for firms with high-ability managers. We also find that high-ability managers tend to spend less cash and accumulate more. High-ability managers are able to reserve the bad firm performance due to cash dissipation, which confirm our hypothesis that managers with high ability tend to make correct investment decisions, maintain low costs and have a more accurate vision of industry and market.
Description
May 2014
School of Management
School of Management
Full Citation
Publisher
Rensselaer Polytechnic Institute, Troy, NY