Each factor grouped a set of constructs highly correlated to each other and weakly correlated to constructs of other factors, thus indicating that the owner-managers under investigation had valued managerial functions and roles in four different ways.
To capture the value of managerial flexibility, a real option approach is implemented.
Fuzzy real options analysis is employed to evaluate risky projects where the value of managerial flexibility cannot be overlooked.
The conventional discounted cash flow methods ignore the value of managerial and strategic flexibility inherent in these investments, which is crucial for justification of the investment decision.
With our sample, we find strong and robust evidence that the relation between firm value and managerial ownership is negative rather than positive and thus opposite to theoretical predictions and prior empirical findings.
Yet, when we restrict our sample to the subset of larger firms similar to the samples used by earlier work, we recover their findings of a positive relationship between value and managerial ownership over some range of ownership.
We conclude from the real options analysis that it is crucial for a realistic valuation of energy projects to incorporate the value of managerial flexibility that is influenced by various uncertainties.
The No. 1 factor they valued was "managerial support and involvement"–asking employees their opinions, involving them in decisions, giving them authority to do their jobs, supporting them when they make a mistake, and so forth.
By contrast, ATPs may benefit firms in settings where internal governance mechanisms, such as blockholder monitoring, are more relevant, because they may help reduce takeover market-induced pressure that can lead to value-destroying managerial short-termism.
My experience with organizations of all kinds in many different countries has convinced me that effective value-adding managerial leadership of subordinates can come only from an individual one category higher in cognitive capacity, working one category higher in problem complexity.
