Managers with and without Style: Evidence Using Exogenous Variation

C. Edward Fee; Charles J. Hadlock; Joshua R. Pierce

doi:10.1093/rfs/hhs131

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Managers with and without Style: Evidence Using Exogenous Variation

C. Edward Fee¹; Charles J. Hadlock¹; Joshua R. Pierce²

¹ Michigan State University · ² University of South Carolina

Review of Financial Studies 2013

In a large panel of Compustat firms, we find that firm policy changes after exogenous CEO departures do not display abnormally high levels of variability, casting doubt on the presence of idiosyncratic-style effects in policy choices. After endogenous CEO departures, we do detect abnormally large policy changes. These changes are larger when the firm is likely to draw from a deeper pool of replacement CEO candidates, suggesting the presence of causal-style effects that are anticipated by the board. Our evidence suggests that managerial styles are not transferred across employers and that standard F-tests are inappropriate for identifying style effects.

DOI: 10.1093/rfs/hhs131
Volume: 26 (3)
Pages: 567-601
Language: en
Export: BibTeX
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