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Eurasian Business Review
Published in: Eurasian Business Review 4/2020

30-03-2020 | Regular Article

Regulatory oversight and managerial ability

Author: Reza Hesarzadeh

Published in: Eurasian Business Review | Issue 4/2020

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Abstract

This paper examines whether regulatory oversight affects managerial ability. To measure regulatory oversight, I use comment letters from two Iranian regulatory agencies. Furthermore, to measure managerial ability, I employ managerial ability-score introduced by Demerjian et al. (Management Science 58(7):1229–1248, 2012). Using a difference-in-differences design with a propensity score matching approach, I reveal that the managerial ability of a firm is enhanced following the receipt of a comment letter by the firm. I further reveal that the managerial ability of a firm is enhanced following the receipt of a comment letter by the firm’s industry peers. Collectively, the findings highlight the internalities and externalities of regulatory oversight in the context of managerial ability.
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Footnotes
1
This database is the most comprehensive database in TSE (Hesarzadeh 2019; Hesarzadeh and Rajabalizadeh 2019).
 
2
Notably, in this study, untabulated VIFs are all smaller than two suggesting that multicollinearity is insignificant issue.
 
3
Notably, for brevity, the table does not present the PS matching model and the test of difference in means of matched paired (i.e., equivalent tables for Tables 4 and 5). Nevertheless, untabulated results indicate that the matching process is effective.
 
4
In our sample, 31 observations have received both SEO and NSO comment letters.
 
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Metadata
Title
Regulatory oversight and managerial ability
Author
Reza Hesarzadeh
Publication date
30-03-2020
Publisher
Springer International Publishing
Published in
Eurasian Business Review / Issue 4/2020
Print ISSN: 1309-4297
Electronic ISSN: 2147-4281
DOI
https://doi.org/10.1007/s40821-020-00150-0

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