Executive Quirks in Operational Decisions
We ask if corporate executives have fixed effects (quirks) that explain perational decisions made in firms, independent of firm effects. We replicate the approach in Bertrand et al. (2003), solving the empirical challenge of distinguishing firm and executive effects by constructing a dataset of executives who move from one firm to another. We find that executives indeed exhibit fixed effects separate from firm effects. These quirks are large, although there is a wide dispersion of sizes among executives. The quirks also come in themes, such as a bias toward investing in human rather than physical capital. We also find that quirks mostly lead to inefficient outcomes for firms. Finally, we link quirks to observable characteristics of executives, such as their age or education. We conclude by arguing for an increased focus on individual effects in operations management research.
|Date of creation:||05 Mar 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:4757. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.