Abstract

http://ssrn.com/abstract=2142465
 


 



Looking in the Rear View Mirror: The Effect of Managers’ Professional Experience on Corporate Financial Policy


Amy K. Dittmar


University of Michigan at Ann Arbor - The Stephen M. Ross School of Business

Ran Duchin


University of Washington - Michael G. Foster School of Business

January 28, 2014

Ross School of Business Paper No. 1221

Abstract:     
We track the employment history of over 9,000 managers to study the effects of professional experiences on corporate policies. Our identification strategy exploits exogenous CEO turnovers and employment in other firms, in non-CEO roles and early in their career. Firms run by CEOs who experienced distress issue less debt, save more cash, and invest less than other firms. Past experience affects both managerial appointments and corporate policies, with stronger effects in poorly governed firms. We find similar effects on debt and cash, but not investment, for CFOs. The results suggest that policies vary with managers’ experiences and throughout their careers.

Number of Pages in PDF File: 52

Keywords: CEO experience, style, leverage, cash, investment, behavioral finance

JEL Classification: G30, G31, G32

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Date posted: September 7, 2012 ; Last revised: February 4, 2014

Suggested Citation

Dittmar, Amy K. and Duchin, Ran, Looking in the Rear View Mirror: The Effect of Managers’ Professional Experience on Corporate Financial Policy (January 28, 2014). Ross School of Business Paper No. 1221. Available at SSRN: http://ssrn.com/abstract=2142465 or http://dx.doi.org/10.2139/ssrn.2142465

Contact Information

Amy Dittmar (Contact Author)
University of Michigan at Ann Arbor - The Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-764-3108 (Phone)
HOME PAGE: http://webuser.bus.umich.edu/adittmar/
Ran Duchin
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
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