Career Experience and Executive Performance: Evidence from Former Equity Research Analysts

53 Pages Posted: 28 Jun 2019 Last revised: 23 Feb 2021

See all articles by Shawn X. Huang

Shawn X. Huang

Arizona State University (ASU) - School of Accountancy

Artur Hugon

Arizona State University (ASU)

Summer Liu

Arizona State University (ASU)

Liwei Weng

The Hong Kong Polytechnic University

Date Written: February 22, 2021

Abstract

This study examines the portability of skillsets to the top executive position. In particular, we examine CEOs and CFOs who have experience as equity research analysts, finding these executives generate earnings guidance that is more accurate than that of other executives, and lead M&A transactions with significantly higher announcement returns. For available executives, we examine their work histories as research analysts, finding stronger results for those who were more accurate forecasters, better stock pickers, more experienced, and those with smaller gaps between their analyst and executive jobs. Beyond these outcomes, we find these executives provide clearer answers to analysts during conference calls, especially when answering forward-looking and quantitative questions. Overall, our evidence suggests that specific skills gained in executives’ formative years significantly impact corporate performance outcomes.

Keywords: Executives, Career experience, Equity analyst, M&A, Earnings forecasts, Conference calls

JEL Classification: M41, G24, J24

Suggested Citation

Huang, Shawn X. and Hugon, Artur and Liu, Summer and Weng, Liwei, Career Experience and Executive Performance: Evidence from Former Equity Research Analysts (February 22, 2021). Available at SSRN: https://ssrn.com/abstract=3399191 or http://dx.doi.org/10.2139/ssrn.3399191

Shawn X. Huang

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Artur Hugon (Contact Author)

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Summer Liu

Arizona State University (ASU) ( email )

AZ
United States

Liwei Weng

The Hong Kong Polytechnic University ( email )

School of Accounting and Finance
M701, Li Ka Shing Tower
Hong Kong
China
+852 2766-7053 (Phone)

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