Measure performance and management ability based on financial criteria

Document Type : Original Article

Authors
Mostafa Kooshafar 1
Iraj Noravesh 2
Bita Mashayekhi 3
1 PhD student of Accounting, University of Tehran Kish International Campus. kish, Iran, (Corresponding Author)
2 Professor of Accounting, University of Tehran, Tehran, Iran
3 Associate Professor of accounting, University of Tehran, Tehran, Iran.
Abstract
Nowadays, performance measurement of organizations and managers is noted and various indicators introduced as validation criteria. Hence, the scope of present research is access to financial criteria for evaluating management efficiency. So, for evaluating management efficiency based on former researches, we first used Demirjian et al (2012) Model to assess management efficiency in Iran. This model describes a management team who can make maximum income with present resources. In evaluating this model, we have 22 pharmaceutical firms confirmed in stock exchange of Tehran between years 1388 to 1394.The Research question test done with data fusion and multivariate regression and data envelopment analysis (DEA).
Research findings show that in this industry, Demerjian model cannot exhibit appropriate management efficiency because of Drug appraisal by Food & Drug Administration and monopoly in drug market.                                                               
Thus, by some changes in this model, we defined a management team which can create maximum value added with available sources for beneficiaries. Then we study management efficiency in those drug firms in which – concerning the results of WOUNG assay- use of this authority criteria is more obvious than Demerjian model.
Keywords
Firm efficiency
Coefficient of value added efficiency for whole institute source
Data envelopment analysis (DEA)
management efficiency
*       احمدیان، مجید؛ قربانی، رحیم(1392). بررسی رابطه بین سرمایه فکری و عملکرد سازمانی: موردمطالعه وزارت امور اقتصادی و دارایی، ماهنامه بررسی مسائل و سیاست‌های اقتصادی، سال سیزدهم، شماره 11 و 12، صص 111-130.
*       بزرگ اصل، موسی و صالح زاده، بیستون(1393). توانایی مدیریت و کیفیت اقلام تعهدی، مجله دانش حسابداری، شماره 17، صص 139-11.
*       حاجیها، زهره؛ قیلاوی، منی (1390). سنجش توانایی مدیریت شرکت‌های تولیدی پذیرفته‌شده در بورس اوراق بهادار تهران. مدیریت کسب و کار، دوره 3، شماره 11. صفحه 25-44
*       صالحی، مهدی؛ باقرپور محمدعلی؛ ولاشانی، مهدی خداپرست مشهدی و اکبری، فرزانه (1395). بررسی تأثیر توانایی مدیران بر پاداش هیأت مدیره و ارزش شرکت در شرکتهای پذیرفته‌شده در بورس اوراق بهادار تهران، چهاردهمین همایش ملی حسابداری.
*       فرهی بو زنجانی، برزو (1384). معرفی الگوی توسعه توانایی های مدیریتی مورد نیاز مدیران. فصلنامه دانش مدیری، شماره 68، صص 70-86.
*       نمازی، محمد و ایراهیمی، شهلا (1392). بررسی تأثیر ساختار مالکیت و ترکیب هیئت مدیره بر کارایی فنی شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران،  فصلنامه دانش حسابداری، دوره 4، شماره 12، صص 35-57.
*       یحیی زاده فر، محمود؛ آقاجانی، حسنعلی و یحیی تبار، فاطمه (1388). بررسی رابطه بین سرمایه فکری و عملکرد مالی شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران، نشریه تحقیقات مالی، دوره 16، شماره 1، صفحه 181-199.

*       Ahsan Habib, Mostafa Monzur Hasan (2017). Managerial ability, investment efficiency and stock price crash risk. Research in International Business and Finance, Volume 42, December 2017, Pages 262-274.

*       Andreou, Panayiotis C, Ehrlich, D and Ch. Louca, Managerial Ability and Firm Performance: Evidence From the Global Financial Crisis, 2013, Working Paper. http://www.mfsociety.org.
*       Berk, J., R. Stanton. 2007. Managerial ability, compensation and the closed-end fund discount. J. Finance 62(2) 529–556.
*       Bertrand, M., Schoar, A., 2003. Managing with style: The effect of managers on firm.
*       Bertrand, M., S. Mullainathan. 2003. Enjoying the quiet life? Corporate governance and managerial preferences. J. Political Econom. 111(5) 1043–1075.
*       Chen, Yangyang; Podolski, Edward J.; & Madhu Veeraraghavan (2015). “Does Managerial Ability Facilitate Corporate Innovative Success?”. Journal of Empirical Finance, Forthcoming.
*       Chen, M.C., S.J. Cheng, and Y. Hwang. (2008). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. Journal of Intellectual Capital.6(2).159-176.
*       Clarkson, M. B. E. (1994). A Risk Based of Stakeholder Theory. Toronto, ON: The Centre for Corporate Social Performance and Ethics, University of Toronto.
*       Demerjian, P., B. Lev, M. Lewis, S. McVay. (2012). Managerial ability and earnings quality. Working paper, Emory University, Atlanta.
*       Demerjian, P.,Lev, B ., and S. McVay. (2009). “Quantifying managerial ability: A new measure and validity tests”, Working paper, Emory University.
*       Fee, C., C. Hadlock. 2003. Raids, rewards, and reputations in the market for managerial talent. Rev. Financial Stud. 16(4) 1315–1357.
*       Ge, W. 2006. Off-balance-sheet activities, earnings persistence and stock prices: Evidence from operating leases. Working paper, University of Washington, Seattle.
*       Ge, W., D. Matsumoto, J. Zhang. (2011). Do CFOs have style? An empirical investigation of the effect of individual CFOs on accounting practices. Contemporary Accounting Res. 28(4) 1141–1179.
*       Leverty, J and Martin F. Grace, Dupes or Incompetents? An Examination of Managementsۥ Impact on Firm Distress, 2009, Working Paper, University Iowa.
*       Leverty, T., M. Grace. (2012). Dupes or incompetents? An examination of management’s impact on firm distress. J. Risk Insurance. Forthcoming.
*       Leverty, J., Y. Qian. (2011). Do acquisitions create more value when good management replaces bad management? Working paper, University of Iowa, Iowa City
*       . Nazari, J. A.; and I. M. Herremans (2007). “Extended VAIC Model: Measuring Intellectual Capital Components.” Journal of Intellectual Capital, Vol. 8, No. 4, pp. 595-609.
*       Pulic, A. (2000). VAIC – an accounting tool for IC management. International Journal of Technology Management. 20 (5,6,8). 702-714.
*       S. J. Joo, D. Nixon, and P. A. Stoeberl,(2011). Benchmarking with data envelopment analysis: A return on asset perspective,‖ Benchmarking: An International Journal, vol. 18, no. 4, pp. 529–542.
*       Silva, A. 2010. Managerial ability and capital flows. J. Development Econom. 93(1) 126–136.
*       Z ainal  Abidin, Z.; Kamal, N. M.; and K. Jusoff (2009). “Board Structure and Corporate Performance in Malaysia.” International Journal of Economics and Finance, Vol. 1, No. 1, pp. 150-164