Fit, Style, and the Portability of Managerial Talent

64 Pages Posted: 17 Nov 2011 Last revised: 19 Sep 2013

See all articles by Yuk Ying (Candie) Chang

Yuk Ying (Candie) Chang

Massey University

Sudipto Dasgupta

Chinese University of Hong Kong, ABFER, CEPR, and ECGI

Jie Gan

Cheung Kong Graduate School of Business

Date Written: September 19, 2013

Abstract

How portable are top management skills? Should (and do) firms care about firm-manager fit when they hire new managers? How is fit related to managerial 'style'? We hypothesize that if firms and managers are matched with each other on the basis of fit on multiple dimensions, then firms that employ the same manager at adjacent points of time should have similar characteristics. We find strong evidence that firms that employ the same manager sort on a number of characteristics. Our empirical design ensures that these results are not explained by managerial style, or by moves among firms of similar size, or within the same industry. We construct a measure for the quality of fit. We find that a worse fit leads to less positive stock price reaction to the announcement of managerial appointments, lower managerial pay, and shorter tenure for the manager, suggesting that management skills do not necessarily transfer from one firm environment to another. We also find evidence that when the firm and the manager do not fit well, managers influence several firm-specific variables, consistent with managerial style.

Keywords: managerial labor market, transferrable managerial skills, job assignment, managerial style

JEL Classification: G30, G32, J24

Suggested Citation

Chang, Yuk Ying and Dasgupta, Sudipto and Gan, Jie, Fit, Style, and the Portability of Managerial Talent (September 19, 2013). Available at SSRN: https://ssrn.com/abstract=1960559 or http://dx.doi.org/10.2139/ssrn.1960559

Yuk Ying Chang

Massey University ( email )

Palmerston North
New Zealand

Sudipto Dasgupta (Contact Author)

Chinese University of Hong Kong, ABFER, CEPR, and ECGI ( email )

CUHK, Cheng Yu Tung Building, Room 1224
Shatin, NT
Hong Kong
Hong Kong

Jie Gan

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China

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