The Impact of Managerial Ability of Executive Managers on the Value of the Enterprise in Non Financial Companies Listed on Palestine Stock Exchange
DOI:
https://doi.org/10.33977/1760-008-019-006Keywords:
Managerial ability, firm value, Tobin’s Q Indicators, Demerjian ModelAbstract
The study aimed to measure the impact of the managerial ability of executives on the value of the business to non-financial companies listed on the Palestine Stock Exchange. To this end, the author relied on the published financial statements of non-financial companies during 2011-2021 comprising a sample of 30 companies from various non-financial sectors such as industry, services, and investment. The sample represented 90.9% of the study community. The study relied on Demerijian model to measure the independent variable of managerial ability. It also relied on Tobin’s Q indicator as a proxy variable on the value of the enterprise, as well as using the return on assets and debt ratio as control variables to adjust the relationship between the independent and dependent variable.
Through data analysis, the study found that there was efficient (ability) managers in PSE listed companies, in general. The service companies have the highest management ability, while industrial companies have the lowest management ability. It also showed there is a positive impact of managerial ability on the value of the enterprise as measured by the Tobin›s Q. indicator with both return on assets and debt ratio as control variables.
The study recommended that stakeholders establish clear rules and procedures for the selection and placement of executives with high managerial ability to reflect this on the company›s value. It also recommended that the listed companies deal with managerial ability as one of the intangible assets. In addition, the study recommended that attention be paid to the Tobin’s Q indicator and its disclosure in financial reports.
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