Managerial Abilities and Performance Measures

This study is aimed to investigate the effects of managerial abilities on performance of firms listed in Tehran Stock Exchange (TSE). In this regard, the effects of firm size and financial leverage (debt ratio) are controlled. Managerial abilities are calculated using Data Envelopment Analysis (DEA) technique. In the following, the relation between performance measures (value added economic, return on equity, P/E ratio and Tobin's Q ratio) and managerial abilities are investigated. The sample consists of 161 firms in the period from 2005 to 2014 using multivariate linear regression. The results indicate that there is a positive significant relation between managerial abilities and firm performance measures. It means that promotion of managerial abilities in better using of resources which results in promotion of firm efficiency may improve firm performance and thus increase shareholders wealth.