Are generalists beneficial to corporate shareholders? Evidence from sudden deaths

This study documents a positive, economically meaningful impact of executives' general managerial skills on shareholder value. Examining 171 sudden executive deaths over thirty years, we find that a one-standard-deviation increase in the general ability index corresponds to at least a 1.5 percentage point decrease in abnormal stock returns to death announcements. Generalists are found to be significantly more valuable for firms with fewer growth prospects where difficult tasks (e.g., restructurings) need to be performed and adaptations to changing business environments become necessary. Our results provide a market-based explanation for the documented generalist hiring premium and the increasing share of generalists.