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Career Concerns and the Busy Life of the Young CEO

Author

Listed:
  • Li, Xiaoyang

    (University of MI)

  • Low, Angie

    (Nanyang Technological University)

  • Makhija, Anil K.

    (OH State University)

Abstract

Using U.S. plant-level data for firms across a broad spectrum of industries, we compare how career concerns affect the real investment decisions of younger and older CEOs. In contrast to prior research which has examined some specialized labor markets, we find that younger CEOs undertake more active, bolder investment activities, consistent with an attempt on their part to signal confidence and superior abilities. They are more likely to enter new lines of business, as well as exit other existing businesses. They prefer growth through acquisitions, while older CEOs prefer to build new plants. This busier investment style of the younger CEOs appears to be relatively successful since younger CEOs are associated with higher plant-level efficiency compared to older CEOs.

Suggested Citation

  • Li, Xiaoyang & Low, Angie & Makhija, Anil K., 2011. "Career Concerns and the Busy Life of the Young CEO," Working Paper Series 2011-4, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
  • Handle: RePEc:ecl:ohidic:2011-4
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    File URL: http://fisher.osu.edu/supplements/10/10471/2011-4.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Citci, Sadettin Haluk & Inci, Eren, 2016. "The masquerade ball of the CEOs and the mask of excessive risk," Economic Modelling, Elsevier, vol. 58(C), pages 383-393.
    2. Waelchli, Urs & Zeller, Jonas, 2013. "Old captains at the helm: Chairman age and firm performance," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1612-1628.
    3. Serfling, Matthew A., 2014. "CEO age and the riskiness of corporate policies," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 251-273.

    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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