Asset Redeployability, Managerial Ability, and Uncertainty

Asset redeployability reflects firm ability to reallocate or sell capital assets in secondary markets. Using data from publicly listed firms, we show that asset redeployability is negatively related to managerial ability, suggesting capable managers maintain lower redeployability levels. We reveal labor efficiency as one channel through which managerial ability influences asset redeployability. Managerial ability’s negative effect on asset redeployability is stronger under low political risk, consistent with it serving as a costly form of insurance against uncertainty. Our findings imply that while asset redeployability is commonly viewed as a source of corporate flexibility, it may also reflect inefficient asset allocation.