Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles

We show that economic conditions when CEOs enter the labor market have lasting impact on their career paths and managerial styles. Recession CEOs take less time to become CEOs, but manage smaller firms, receive lower compensation, and move less across firms and industries. The results appear to be driven by distortions in the initial job allocation during recession times. Recession CEOs also display more conservative styles: lower capital expenditures, overheads and R&D, less leverage, and more diversification. We also document that recession experiences at the time of labor force entry rather than during early childhood explain variations in management styles.