Do Able Bank Managers Exhibit Specific Attributes? An Empirical Analysis of Their Investment Efficiency
Round 1
Reviewer 1 Report
This paper aims to explore the relationship among managerial ability and three different typologies of investments for a sample of banks in 9 countries over the period 2004 to 2010. At very first glance, the paper is well structured and properly documented, therefore showing potential towards publication. Nevertheless, several shortcomings occur such as the obsolete period of investigation. Therewith, the selected sample is quite biased as long as 45% of companies are from the USA and more than 20% are from the UK. In addition, other drawbacks should be fixed as detailed below.
The introductory section reveals in a proper manner the background of the research, alongside the contribution to the related literature, but lacks in providing information towards the banking systems form selected nations. Are there any special features? Why countries such as Canada, France, Germany, Italy, Netherlands, Spain, Sweden, UK and USA should be explored together? As well, an outline of the entire paper should be provided.
The second section is well developed, but I suggest the author(s) to consider two distinct sub-sections (e.g., one sub-section oriented towards the tree kinds of investments - capital, research and development, and acquisition expenditures, whereas another sub-section focused on managerial ability).
The third section should be enriched with a table presenting the selected variables. How the measures were selected? Prior evidence towards variables’ selection should be provided. With reference to empirical methods, the DEA approach requires more details. As well, the section numbering should be revised (e.g., 1.4. Models Testing Managerial Ability and Capital Investment Efficiency, instead of 3.4).
The fourth section perform in a proper manner the quantitative research, but I recommend the author(s) to compare the outcomes with those out of prior literature.
The last section should be extended in terms of policy/practical implications. Likewise, the study limitations and future research directions should be provided.
By taking into account the aforementioned comments and recommendations, I endorse that the manuscript requires further major revisions.
Author Response
First of all, the authors wish to acknowledge the effort made in the review of the paper and the suggestions made that have contributed to improving the work.
This paper aims to explore the relationship among managerial ability and three different typologies of investments for a sample of banks in 9 countries over the period 2004 to 2010. At very first glance, the paper is well structured and properly documented, therefore showing potential towards publication. Nevertheless, several shortcomings occur such as the obsolete period of investigation. Therewith, the selected sample is quite biased as long as 45% of companies are from the USA and more than 20% are from the UK. In addition, other drawbacks should be fixed as detailed below.
We agree with the reviewer that the data is old, however, their interest resides in the time period that we analyzed, closely linked to the last economic recession for which information is available. In relation to the geographical distribution of the sample, this represents the reality of large banks at the international level, a bias that must be present in any analysis. However, we have incorporated both aspects like a limitation of the study and in the sample description in the introduction section.
The introductory section reveals in a proper manner the background of the research, alongside the contribution to the related literature, but lacks in providing information towards the banking systems form selected nations. Are there any special features? Why countries such as Canada, France, Germany, Italy, Netherlands, Spain, Sweden, UK and USA should be explored together? As well, an outline of the entire paper should be provided.
The criteria used in the selection of the sample, the major listed banks worldwide, have determined the sample distribution. Their joint consideration allows to control in the study the variability of managerial ability and the favorable or unfavorable predisposition to investment linked to different institutional contexts, enriching the results that would be obtained with a sample from a single country.
The second section is well developed, but I suggest the author(s) to consider two distinct sub-sections (e.g., one sub-section oriented towards the tree kinds of investments - capital, research and development, and acquisition expenditures, whereas another sub-section focused on managerial ability).
Thanks for your commentary. We have restructured the section 2 into two subsections. One for Managerial ability and the other for their effect in investment decisions.
The third section should be enriched with a table presenting the selected variables. How the measures were selected? Prior evidence towards variables’ selection should be provided. With reference to empirical methods, the DEA approach requires more details. As well, the section numbering should be revised (e.g., 1.4. Models Testing Managerial Ability and Capital Investment Efficiency, instead of 3.4).
Thanks for your suggestion, we have improved variable description but the extension of the paper is quite large and it is not recommendable to include a new table. We also modify the mistakes.
The fourth section perform in a proper manner the quantitative research, but I recommend the author(s) to compare the outcomes with those out of prior literature.
The last section should be extended in terms of policy/practical implications. Likewise, the study limitations and future research directions should be provided.
By taking into account the aforementioned comments and recommendations, I endorse that the manuscript requires further major revisions.
Thanks for your suggestions. Although previous results regarding managerial ability and investment efficiency in banks are scarce, we have related our results with some similar papers in the field of managerial ability.
In relation to practical implications, limitation and future research, we have indicated that In addition, from a practical point of view, our results suggest the relevance of managers selections process in order to quantify their ability due to this attribute is essential in order to avoid agency problems associated to managers´ individual preferences. We have indicated that this study is subjected to several limitations, especially the time period and the sample distribution, that have been taken into account in order to interpret our results. In this sense, future research could focus in specific countries in order to accept or reject our research hypothesis in specific countries like Islamic or emerging economies, geographic locations which institutional environment are quite different in terms of culture or religion values, between others. In addition, the economic recession associated to the COVID-19 consequences could be an interested framework for future analysis in pre-in-post economic recession periods.
Reviewer 2 Report
Dear Authors,
The paper analyses an interesting theme, i.e. the association between managerial ability in banks and three different typologies of investments that demand significant resources: capital, research and development and acquisition expenditures, and if managerial ability is related to increased/ reduced investment in banks prone to underinvestment /overinvestment.
The paper is well organized, but I have only one recommendation: to authors should complete the Conclusions with similar results found in the literature, i.e. results should be interpreted according to the results presented in the literature studied.
Also, text editing should be checked.
Best regards!
Author Response
Dear Authors,
The paper analyses an interesting theme, i.e. the association between managerial ability in banks and three different typologies of investments that demand significant resources: capital, research and development and acquisition expenditures, and if managerial ability is related to increased/ reduced investment in banks prone to underinvestment /overinvestment.
The paper is well organized, but I have only one recommendation: to authors should complete the Conclusions with similar results found in the literature, i.e. results should be interpreted according to the results presented in the literature studied.
Also, text editing should be checked.
Best regards!
Yes, many thanks for your suggestions. We have included some previous results in the conclusion section as well as in section four (results), where we have also related our findings with some similar papers in the field of managerial ability.
Reviewer 3 Report
This study is very interesting, the objective is clear, the mathematical methodology is correct.
I can only say good things about this study on its own.
The literature background is also acceptable.
For me the question is how to get more out of this for readers...
Written by authors on the abstract pages:
"We also analyse whether managerial ability is related to increased (reduced) investment in banks prone to underinvestment (overinvestment).
It's a right direction, the dissertation is based on this basic analysis.
But the sequel is not very telling...
" The sample for analysis is compared of 877 observations of banks in 9 countries over hte 2004 to 2010 period." by authors.
Well, which countries, which region, developed or developing or together, miscellanneous? In what proportion? Where are this banks? Are they "western" bank or Islam?
In my view, the geographical determinism matters a lot in a disquisition.
The examined circle should be well delimited, presented in its main details.
In present form I have not seen lot of useful information about this topic...
I can not pleace things in space.
By the way, the examined period is a little old fashioned. Closer information in time would also be good.
According me, the authors feel the topic, but the dissertation should be further developed.
Author Response
This study is very interesting, the objective is clear, the mathematical methodology is correct.
I can only say good things about this study on its own.
The literature background is also acceptable.
For me the question is how to get more out of this for readers...
Written by authors on the abstract pages:
"We also analyse whether managerial ability is related to increased (reduced) investment in banks prone to underinvestment (overinvestment).
It's a right direction, the dissertation is based on this basic analysis.
But the sequel is not very telling...
" The sample for analysis is compared of 877 observations of banks in 9 countries over hte 2004 to 2010 period." by authors.
Well, which countries, which region, developed or developing or together, miscellanneous? In what proportion? Where are this banks? Are they "western" bank or Islam?
In my view, the geographical determinism matters a lot in a disquisition.
The examined circle should be well delimited, presented in its main details.
In present form I have not seen lot of useful information about this topic...
I can not pleace things in space.
By the way, the examined period is a little old fashioned. Closer information in time would also be good.
According me, the authors feel the topic, but the dissertation should be further developed.
We agree with the reviewer that the data is old, however, their interest resides in the time period that we analyzed, closely linked to the last economic recession for which information is available. In relation to the geographical distribution of the sample - Canada, France, Germany, Italy, Netherlands, Spain, Sweden, UK and USA -, this represents the reality of large banks at the international level, a bias that must be present in any analysis. However, we have incorporated both aspects like a limitation of the study and in the sample description in the introduction section.
The criteria used in the selection of the sample, the major listed banks worldwide, have determined the sample distribution. Their joint consideration allows to control in the study the variability of managerial ability and the favorable or unfavorable predisposition to investment linked to different institutional contexts, enriching the results that would be obtained with a sample from a single country.
In order to improve our paper, we have restructured the section 2 into two subsections. One for Managerial ability and the other for their effect in investment decisions. In relation to practical implications, limitation and future research, we have indicated that In addition, from a practical point of view, our results suggest the relevance of managers selections process in order to quantify their ability due to this attribute is essential in order to avoid agency problems associated to managers´ individual preferences. We have indicated that this study is subjected to several limitations, especially the time period and the sample distribution, that have been taken into account in order to interpret our results. In this sense, future research could focus in specific countries in order to accept or reject our research hypothesis in specific countries like Islamic or emerging economies, geographic locations which institutional environment are quite different in terms of culture or religion values, between others. In addition, the economic recession associated to the COVID-19 consequences could be an interested framework for future analysis in pre-in-post economic recession periods.
Round 2
Reviewer 1 Report
The manuscript entitled “DO ABLE BANK MANAGERS EXHIBIT SPECIFIC ATTRIBUTES? AN EMPIRICAL ANALYSIS OF THEIR INVESTMENT EFFICIENCY” (Manuscript ID: admsci-838528) improved in a significant manner. The author(s) incorporated the suggested changes and provided proper explanations and arguments. Therefore, I endorse paper acceptance in current form.
Author Response
Thanks for your opinion
Reviewer 3 Report
After revision I may suggest this study will be published.
Author Response
Thanks for your opinion
