Journal Article

The Mediating Role of Investment Efficiency in the Relationship between Managerial Ability and Firm Value

Belal, El-Sayed Hassan Salem, Elbelbisy, Farida Abdel Assamea, Hefny, Dina Ali Abdelhameed

2025

Overview

This research aimed to verify the mediation effect of investment efficiency on the relationship between managerial ability and firm value of the Egyptian listed firms. This study depends on a sample of 111 firms listed on the Egyptian stock exchange distributed over 11 sectors during the period 2017 to 2021. In addition, the indirect relationship between managerial ability and firm value is investigated. In order to test the hypotheses of the study, the study relied on Tobin's Q ratio and market capitalization to measure the firm value. In measuring managerial ability, the study relied on Data Envelopment Analysis \"DEA\" according to Demerjian et al., (2012). In measuring investment efficiency, the study relied on the use of the model that was developed by (Biddle et al., 2009). To test hypotheses, a simple mediation model is tested using path analysis. The results indicate that (1) There is a negative and significant relationship between managerial ability and firm value: the result provide empirical support for the expectations of the agency theory that managerial ability mechanisms can have negative impacts on the behavior and incentives of the management. Therefore, the management ability is against the shareholders' interests and the organizations' effectiveness. (2) There is a positive and significant relationship between managerial ability and investment efficiency. (3)There is a positive relationship between investment efficiency and firm value. The results also reveal that there is mediating role of investment efficiency in the relationship between managerial ability and firm value.

• Publisher: جامعة الزقازيق - كلية التجارة
• Subject: البورصة المصرية / التخطيط الإداري / الشركات المساهمة المصرية / الكفاءة الاستثمارية