Inventory overproduction and managerial ability

This study examines a sample of manufacturing firms in order to assess the relationship between overproduction levels with different managerial ability. Using ability measure developed by Demerjian et al. (2012), this paper shows that high have smaller size overproduction. Furthermore, when occurs ability, it is less likely reverse following year and more be associated future sales increases. Overall, results suggest generally avoid High-ability managers having fewer reversals they are use manage earnings; instead, overproduce build up inventory expect higher sales.