Antoinette Schoar and Luo Zuo have published a new paper titled, "Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Style." They studied how early career experiences shape future career prospects and decision-making. Here is what they found:
"Economic conditions at the beginning of a manager’s career have lasting effects on the career path and the ultimate outcome as a CEO. CEOs who start in recessions take less time to become CEOs, but end up as CEOs in smaller firms, receive lower compensation, and are more likely to rise through the ranks within a given firm rather than moving across firms and industries. Moreover, managers who start in recessions have more conservative management styles once they become CEOs."
I found the last point particularly interesting, namely that a person tends to become a bit more risk averse after experiencing a major recession early in his or her career. Now that could be a good thing. Perhaps we will see less "irrational exuberance" in future years from those currently starting out their careers.