Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles
Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)
Cornell University - Samuel Curtis Johnson Graduate School of Management
February 26, 2016
We show that economic conditions when CEOs enter the labor market have long-run effects on their career paths and managerial styles. Managers who begin their careers during recessions become CEOs more quickly, but at smaller firms. They also have more conservative styles, e.g., lower investment in capex and R&D, more cost cutting, and lower leverage and working capital needs. These recession effects appear to be largely driven by the characteristics of the CEO’s first job (they tend to start in smaller or private firms), which suggests that the early work environment is important to the formation and selection of managers.
Number of Pages in PDF File: 49
Keywords: Recession, Career Path, Management Style, Executive Labor Market
JEL Classification: G30, G31, G32, J24, M51
Date posted: November 7, 2011 ; Last revised: February 27, 2016
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
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