Do able managers take more risks?

Empirical evidence on the relation between managers and risk is mixed, with data mostly from developed countries, aggregated measures are used in study of this existing literature. The purpose to examine how managerial ability affects idiosyncratic taking, especially innovative firms China, which largest developing country world. Using Demerjian et al.’s (2012) measure a sample Chinese 2009 2019, we observe positive relationship based fixed effects models. findings robust endogeneity concerns. Subsample analyses reveal that more pronounced when there greater earnings pressure or information gaps, whereas such less at higher innovation levels due earning short run focus long-term growth through technological innovation. In addition, find has impact firm value, yet effect weakened fluctuation. Our implications for agency theory ability, may come additional problems heterogeneous risk-taking incentives, can have negative value if able managers’ motivations behaviors not adequately monitored constrained.