THE IMPACT OF MANAGERIAL ABILITY, REGULATORY ADAPTABILITY, AND INFORMATION SYSTEMS SOPHISTICATION ON FINANCIAL FIRM PERFORMANCE

Abstract

This study examines the influence of managerial ability on firm performance within the financial sector, considering the roles of regulatory adaptability and information systems sophistication. Utilizing panel regression analysis on data from 960 European firms, the research evaluates performance through Return on Equity (ROE), Return on Assets (ROA), and Tobin’s Q. Findings reveal that managerial ability significantly improves firm performance across all metrics. Additionally, regulatory adaptability and advanced information systems positively moderate this relationship, underscoring the importance of institutional agility and digital infrastructure. The results suggest that combining managerial talent with proactive regulatory strategies and technology investments enhances competitive advantage. The study recommends that financial institutions prioritize leadership development, embrace regulatory innovation, and accelerate digital transformation to sustain superior performance.