How Much Are Differences in Managerial Ability Worth

@article{Hayes1999HowMA,
  title={How Much Are Differences in Managerial Ability Worth},
  author={R. Hayes and S. Schaefer},
  journal={Journal of Accounting and Economics},
  year={1999},
  volume={27},
  pages={125-148}
}
  • R. Hayes, S. Schaefer
  • Published 1999
  • Economics
  • Journal of Accounting and Economics
  • This paper attempts to measure how much differences in managerial ability can affect firms' values. If transaction costs or firm specific human capital prevent the firm and CEO from recontracting to the CEO's market wage, then the value of the firm will depend on the continued employment of the CEO. Assuming perfect capital markets, abnormal returns surrounding the sudden termination of the manager/firm relationship will reflect these quasi rents. Applying Lazear's (1986) model of raids in the… CONTINUE READING
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