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Managers with and without Style: Evidence Using Exogenous Variation

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

Abstract

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. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Suggested Citation

  • C. Edward Fee & Charles J. Hadlock & Joshua R. Pierce, 2013. "Managers with and without Style: Evidence Using Exogenous Variation," The Review of Financial Studies, Society for Financial Studies, vol. 26(3), pages 567-601.
    • Handle: RePEc:oup:rfinst:v:26:y:2013:i:3:p:567-601
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