Working Paper: NBER ID: w17590
Authors: Antoinette Schoar; Luo Zuo
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: CEO careers; Management styles; Economic conditions; Labor market; Recession
JEL Codes: D21; D23; G3; G31; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic environment at the start of a career (L26) | subsequent career outcomes (J62) |
| first job characteristics during recessions (J63) | human capital mix and management style of CEOs (D29) |
| first job allocation during a recession (J68) | different human capital mix and management style once the manager becomes CEO (M54) |
| recession CEOs (M12) | more conservative management styles (M54) |
| characteristics of the first job (J29) | career trajectory and managerial style of the CEO (M12) |
| economic environment at the start of a manager's career (M13) | career trajectory and managerial style (M54) |