"Managerial Capital at the Top: Evidence from the Time Use of CEOs"
Publication type: Working paper
CEOs are often cited as a key factor in determining the success of a firm. However, direct evidence on the behavior of corporate leaders is scant. To fill this gap, we record in detail the activities undertaken by 354 CEOs of listed Indian manufacturing firms over an exogenously chosen work week. We observe substantial heterogeneity in total hours worked ("labor supply") and the allocation of time across activities ("style"). In particular, CEOs can be divided in two groups. The CEOs in the first group (Style 1) are more likely to plan in advance, interact mostly with employees of the firms who are their direct reports, especially in production, and are more likely to meet with many people, and different functions, at the same time. The second group of CEOs (Style 2) is less likely to plan, more likely to meet with outsiders in one-to-one meetings. CEOs who work longer hours and that fall in the Style 1 category are associated with higher firm-level productivity and profitability. CEO labor supply and style are strongly associated with firm level characteristics. In particular, family CEOs work fewer hours and are less likely to adopt the more productive style. To investigate the source of these differences between family and non-family CEOs, we study the effect of two sources of shocks to the disutility of work: extreme weather and televised cricket matches. Controlling for other factors, family CEOs are more likely to decrease their labor supply in response to these shocks.
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