City Research Online

Abstract

We build on agency and strategy literature to investigate and explain whether and how changes in stock returns are related to critical managerial expenditure decisions by firms that are consistent and supportive of the firm’s strategy in different industry concentrations. Unlike previous work, our study considers the impact of an extended list of managerial expenditure decisions in the different industry concentration settings. Our research employs a rich panel of firms listed on the UK London Stock Exchange. We find strong support for our postulations. Key managerial expenditure decisions we considered, leverage, inventories turnover, R&D intensity, SGA and fixed asset additions have a differential impact depending on the industry concentration. Our findings add to our understanding of the effect of managerial agency and its integration to strategy on firm stock returns. Managerial expenditure decisions are both constrained by the competitive context as well as strategic logic – both of which impact stock returns. Our study helps managers to prioritize consequential expenditure decisions in different competitive contexts – a key resource for not only weathering crisis periods but optimizing returns to shareholders.

Publication Type:	Article
Additional Information:	© 2024 The Author(s). Published by Elsevier Inc. on behalf of Temple University. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Publisher Keywords:	Industry Concentration, Leverage, Inventories, R&D, SGA, Fixed Asset Additions, Firm Value
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Management
SWORD Depositor:	Symplectic Administrator

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