MANAGING WITH STYLE: THE EFFECT OF MANAGERS ON FIRM POLICIES*
Marianne Bertrand and Antoinette Schoar
This paper investigates whether and how individual managers affect corpo rate behavior and performance. We construct amanager-firm matched panel data set which enables us to track the top managers across different firms over time.
We find that manager fixed effects matter for a wide range of corporate decisions.
A significant extent of the heterogeneity in investment, financial, and organiza tional practices of firms can be explained by the presence of manager fixed effects.
JOURNAL
managers. to manager
fixed
I. Introduction
I would have said it was capital, history, the name of the about the guy at the top. I am very much a process
style is significantly related
Moreover, fixed effects
in performance higher compen
management
and that managers with higher performance
sation and are more likely to be found in better governed firms. In a final step, we tie back these findings to observable managerial characteristics. We find that executives from earlier birth cohorts appear on average to be more conservative;
on the other hand, managers who hold an MBA degree seem to follow on average
participants
at Northwestern
of Management
of Technology, the University of Chicago
Kevin J. Murphy and Robert Parrino for generously providing us with their data.
Jennifer Fiumara and Michael McDonald provided excellent research E-mail: marianne.bertrand@gsb.uchicago.edu; aschoar@mit.edu.
? 2003 by the President and Fellows of Harvard College and the Massachusetts
Technology.
The Quarterly Journal of Economics, November 2003
assistance.
Institute of
1169
effects receive
we show