The importance of managerial ability on crude oil price uncertainty-firm performance relationship

This paper investigates the effect of crude oil price uncertainty on firm performance and how the managerial ability impacts on this relationship. Using a large sample of 13,610 U.S firms from 1983 to 2016, we reveal two main findings. Consistent with our hypothesis, we find strong evidence for a negative effect of crude oil price uncertainty on firm performance at both aggregate market and sectoral levels. However, managerial ability helps firms dampen a significant proportion (approximately 20%–50%) of the negative effect. These findings are consistent in several robustness tests.