The Effect of Managers on Systematic Risk / Antoinette Schoar, Kelvin Yeung, Luo Zuo.

Format:

Book

Author/Creator:

Schoar, Antoinette.

Contributor:

National Bureau of Economic Research.

Yeung, Kelvin.

Zuo, Luo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27487.

NBER working paper series no. w27487

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

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. In equilibrium, manager fixed effects on systematic risk are positively related with manager fixed effects on stock returns. 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 when managers wield more influence, as in smaller firms and firms that do not have an independent board. Overall, our results suggest that managers play an important role in shaping a firm's systematic risk.

Notes:

Print version record

July 2020.