Career Concerns and the Busy Life of the Young CEO
Cheung Kong Graduate School of Business
Nanyang Technological University - Division of Banking & Finance
Anil K. Makhija
Ohio State University (OSU) - Department of Finance
Charles A. Dice Center Working Paper No. 2011-4
Fisher College of Business Working Paper No. 2011-03-004
We compare real investment decisions of younger and older Chief Executive Officers (CEOs). We find that younger CEOs undertake more active, bolder investment activities. They are more likely to enter new lines of business and exit from existing ones. They prefer growth through acquisitions, while older CEOs prefer to build new plants. This busier investment style of the younger CEOs appears not to hurt firm efficiency since younger CEOs are associated with equally high plant-level efficiency compared to older CEOs. Taken together, our results are consistent with the hypothesis that career concerns matter for CEOs’ real investment decisions.
Number of Pages in PDF File: 58
Keywords: Career Concerns, CEO Age, Real Investments, Restructing
JEL Classification: G34working papers series
Date posted: February 15, 2011 ; Last revised: April 10, 2014
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