The Impact of Managerial Ability and Overconfidence on Firm Risk-taking: The Moderating Role of Corporate Governance Efficiency | ||||
| المجلة العلمية للبحوث التجارية (جامعة المنوفية) | ||||
| Articles in Press, Accepted Manuscript, Available Online from 29 January 2025 | ||||
| Document Type: المقالة الأصلية | ||||
| DOI: 10.21608/sjsc.2025.356201.1550 | ||||
 View on SCiNiTO | ||||
| Authors | ||||
hanaa elhabashy  1; Ahmed El-Sayed Mohammed Abo-Donia2; Ahmed Mokhtar Ismail Abou Sheashaa3
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| 1كلية التجارة جامعة المنوفية | ||||
| 2مدرس كلية التجارة جامعة المنوفية | ||||
| 3مدرس كلية التجارة جامعة السويس | ||||
| Abstract | ||||
| This study aims to investigate the impact of managerial ability and overconfidence on firm risk-taking in Egypt and to examine the moderate effect of corporate governance efficiency on such a relationship. The sample includes 45 non-financial EGX-100 index firms from 2018 to 2022 with 225 balanced observations. Four accounting-based proxies are used to measure firm risk-taking. Managerial ability is estimated based on the DEA-Tobit approach developed by Demerjian et al. (2012). Managerial overconfidence was evaluated using the Schrand & Zechman (2012) indicator. Corporate governance efficiency is calculated using the DEA platform, which uses inputs and outputs of corporate governance. Data were then analyzed using panel regression models with fixed and random effects. Results showed a positive relationship between managerial ability and corporate risk-taking. Increasing managerial ability increases firm risk-taking, as high-ability managers are more adept at capitalizing on opportunities. Results also indicated that managerial overconfidence negatively influences firm risk-taking indicators. Further, findings showed that corporate governance efficiency moderately influences the impact of managerial ability and overconfidence in firm risk-taking. Moreover, firm size positively affects firm risk-taking proxies, supporting the political costs hypothesis in the positive accounting theory, as big-size firms are more likely to take risks to reduce political costs. | ||||
| Keywords | ||||
| Managerial ability; Overconfident managers; Firm risk-taking; Positive accounting theory | ||||
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Statistics Article View: 223 |
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