NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Effect of Managers on Systematic Risk

Antoinette Schoar, Kelvin Yeung, Luo Zuo

NBER Working Paper No. 27487
Issued in July 2020
NBER Program(s):Asset Pricing, Corporate Finance

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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Document Object Identifier (DOI): 10.3386/w27487

 
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