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Managerial myopia, financial expertise, and executive-firm matching
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Resumo(s)
Existing literature emphasizes skills-based explanations for executive-firm matching, namely in the context of financial expertise. In contrast, our paper argues that informational concerns may also be relevant. We model a public firm with a project opportunity of uncertain quality, where long-run shareholders choose between hiring an operational manager or a financial expert. These managers are equally myopic, however financial experts are also privy to stock-market beliefs. Financial experts invest sub-optimally due to catering incentives, while operational managers tend to engage in signaling-driven overinvestment. We show that operational managers are preferred for low-NPV projects or when stock markets are well informed.
Descrição
Funding: FCT - Fundacao para a Ciencia e Tecnologia (UID/ECO/00124/2013 ) and POR Lisboa (LISBOA-01-0145-FEDER-007722)
Palavras-chave
Catering Executive-firm matching Financial expertise Managerial myopia Business and International Management Finance Economics and Econometrics Strategy and Management