How do investors perceive the skill set that different types of CEOs bring into their companies. A growing body of research offers evidence that CEOs and other top executives show large and persistent person-specific heterogeneity in their management styles. The results of this article suggest that investors value the skill set that recession CEOs bring into their companies. It is possible that a board selects recession CEOs based on the firm’s specific needs. However, if it were obvious that a firm would always hire a recession CEO when it has a specific need for this skill set, the announcement of such a hire should not contain any news for the market; all the potential performance impact should have been priced in previously. Thus, our results show that the announcement of a recession CEO hire is seen as unexpected good news for a firm, most likely since this skill set is in short supply in the market and the announcement confirms that the firm was able to hire this type of CEO. But it also implies that the market believes that this particular style has a value added for the firm.
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