The Effect of Managers on Systematic Risk

59 Pages Posted: 10 Aug 2020

See all articles by Antoinette Schoar

Antoinette Schoar

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

Kelvin Yeung

Cornell University - Samuel Curtis Johnson Graduate School of Management

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: July 2020

Abstract

Tracking the movement of top managers across firms, we document the importance of manager-specific fixed effects in explaining heterogeneity in firm exposures to systematic risk. These differences in systematic risk are partially explained by managers’ corporate strategies, such as their preferences for internal growth and financial conservatism. Managers’ early-career experiences of starting their first job in a recession also contribute to differential loadings on systematic risk. These effects are more pronounced for smaller firms. Overall, our results suggest that managerial styles have important implications for asset prices.

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Suggested Citation

Schoar, Antoinette and Yeung, Kelvin and Zuo, Luo, The Effect of Managers on Systematic Risk (July 2020). NBER Working Paper No. w27487, Available at SSRN: https://ssrn.com/abstract=3670001

Antoinette Schoar (Contact Author)

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

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Kelvin Yeung

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

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Luo Zuo

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

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