Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles

Review of Financial Studies, Forthcoming

49 Pages Posted: 7 Nov 2011 Last revised: 1 Feb 2017

Antoinette Schoar

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management

Multiple version iconThere are 3 versions of this paper

Date Written: January 31, 2017

Abstract

We show that economic conditions when managers enter the labor market have long-run effects on their career paths and managerial styles. Managers who began their careers during recessions become CEOs more quickly, but at smaller firms. They also have more conservative styles, such as lower investment in capital expenditures and research and development, 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 (recession CEOs tend to start in smaller or private firms), which suggests that the early work environment is important to the formation and selection of managers.

Keywords: Recession, Career Path, Management Style, Executive Labor Market

JEL Classification: G30, G31, G32, J24, M51

Suggested Citation

Schoar, Antoinette and Zuo, Luo, Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles (January 31, 2017). Review of Financial Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1955612 or http://dx.doi.org/10.2139/ssrn.1955612

Antoinette Schoar (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

50 Memorial Drive, E52-447
Cambridge, MA 02142
United States
617-253-3763 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

349 Sage Hall
Ithaca, NY 14853
United States
607-255-4002 (Phone)

HOME PAGE: http://www.johnson.cornell.edu/Faculty-And-Research/Profile/id/lz352

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