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
June 2, 2013
We show that economic conditions when CEOs enter the labor market have lasting impact on their career paths and managerial styles. Recession CEOs take less time to become CEOs, but manage smaller firms, receive lower compensation, and move less across firms and industries. They also display more conservative styles: lower capital expenditures and R&D, less leverage, more diversification and lower overheads. These results do not seem to be driven by ex ante selection but by their labor-market experience. Recession experience at the time of labor force entry rather than during childhood explains most of the variation in management styles.
Number of Pages in PDF File: 50working papers series
Date posted: November 7, 2011 ; Last revised: June 3, 2013
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