Beschreibung:
We examine the link between managerial ability and investment inefficiency using mixed quantitative and qualitative analyses in a unique developing economy setting. Results show that managerial ability decreases over /under-investment inefficiency under traditional regression models. Our findings are robust to addressing endogeneity using several approaches. Additional results show that the effect is more pronounced for family firms, firms with certified directors, higher financial constraints, higher external financing reliance, and periods of production difficulties. Results from fuzzy set qualitative comparative analysis (fsQCA) suggest that managerial inability is a core condition for overinvestment. However, managerial inability does not appear to be a core condition for the presence of underinvestment. Overall, our results suggest that understanding the influence of managerial ability on firms' investment decisions is a complex problem, and the traditional regression approach in insufficient to uncover the nature of the relation