skip to content
Learning about CEO ability and stock return volatility Preview this item
ClosePreview this item
Checking...

Learning about CEO ability and stock return volatility

Author: Yihui Pan; Tracy Yue Want; Michael S Weisbach; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2013.
Series: Working paper series (National Bureau of Economic Research), no. 18882.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Database:WorldCat
Summary:
When there is uncertainty about a CEO's quality, news about the firm causes rational investors to update their expectation of the firm's profitability for two reasons: Updates occur because of the direct effect of the news, and also because the news can cause an updated assessment of the CEO's quality, affecting expectations of his ability to generate future cash flows. As a CEO's quality becomes known more  Read more...
Rating:

(not yet rated) 0 with reviews - Be the first.

Subjects
More like this

 

Find a copy online

Find a copy in the library

&AllPage.SpinnerRetrieving; Finding libraries that hold this item...

Details

Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Yihui Pan; Tracy Yue Want; Michael S Weisbach; National Bureau of Economic Research.
OCLC Number: 830293175
Notes: Title from http://www.nber.org/papers/18882 viewed March 18, 2013.
"March 2013."
Description: 1 online resource (52 pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 18882.
Responsibility: Yihui Pan, Tracy Yue Wang, Michael S. Weisbach.

Abstract:

When there is uncertainty about a CEO's quality, news about the firm causes rational investors to update their expectation of the firm's profitability for two reasons: Updates occur because of the direct effect of the news, and also because the news can cause an updated assessment of the CEO's quality, affecting expectations of his ability to generate future cash flows. As a CEO's quality becomes known more precisely over time, the latter effect becomes smaller, lowering the stock price reaction to news, and hence lowering the stock return volatility. Thus, in addition to uncertainty about fundamentals, uncertainty about CEO quality is also a source of stock return volatility, which decreases over a CEO's tenure as the market learns the CEO's quality more accurately. We formally model this idea, and evaluate its implications using a large sample of CEO turnovers in U.S. public firms. Our estimates indicate that there is statistically significant and economically important market learning about CEO ability, even for CEOs whose appointments appear to be unrelated to their predecessors' performance. Also consistent with the learning model is the fact that the learning curve appears to be convex in time, and learning is faster when there is higher ex ante uncertainty about the CEO's ability and more transparency about the firm's prospects. Overall, uncertainty about management quality appears to be an important source of stock return volatility.

Reviews

User-contributed reviews
Retrieving GoodReads reviews...
Retrieving DOGObooks reviews...

Tags

Be the first.
Confirm this request

You may have already requested this item. Please select Ok if you would like to proceed with this request anyway.

Linked Data


Primary Entity

<http://www.worldcat.org/oclc/830293175> # Learning about CEO ability and stock return volatility
    a schema:MediaObject, schema:Book, schema:CreativeWork ;
    library:oclcnum "830293175" ;
    library:placeOfPublication <http://id.loc.gov/vocabulary/countries/mau> ;
    library:placeOfPublication <http://experiment.worldcat.org/entity/work/data/1213478754#Place/cambridge_mass> ; # Cambridge, Mass.
    schema:about <http://experiment.worldcat.org/entity/work/data/1213478754#Topic/corporate_governance_psychological_aspects_econometric_models> ; # Corporate governance--Psychological aspects--Econometric models
    schema:about <http://experiment.worldcat.org/entity/work/data/1213478754#Topic/chief_executive_officers_psychological_aspects_econometric_models> ; # Chief executive officers--Psychological aspects--Econometric models
    schema:about <http://experiment.worldcat.org/entity/work/data/1213478754#Topic/stocks_prices_psychological_aspects> ; # Stocks--Prices--Psychological aspects
    schema:bookFormat schema:EBook ;
    schema:contributor <http://viaf.org/viaf/127108210> ; # National Bureau of Economic Research.
    schema:contributor <http://viaf.org/viaf/13384864> ; # Michael Steven Weisbach
    schema:contributor <http://experiment.worldcat.org/entity/work/data/1213478754#Person/want_tracy_yue> ; # Tracy Yue Want
    schema:copyrightYear "2013" ;
    schema:creator <http://viaf.org/viaf/297412132> ; # Yihui Pan
    schema:datePublished "2013" ;
    schema:description "When there is uncertainty about a CEO's quality, news about the firm causes rational investors to update their expectation of the firm's profitability for two reasons: Updates occur because of the direct effect of the news, and also because the news can cause an updated assessment of the CEO's quality, affecting expectations of his ability to generate future cash flows. As a CEO's quality becomes known more precisely over time, the latter effect becomes smaller, lowering the stock price reaction to news, and hence lowering the stock return volatility. Thus, in addition to uncertainty about fundamentals, uncertainty about CEO quality is also a source of stock return volatility, which decreases over a CEO's tenure as the market learns the CEO's quality more accurately. We formally model this idea, and evaluate its implications using a large sample of CEO turnovers in U.S. public firms. Our estimates indicate that there is statistically significant and economically important market learning about CEO ability, even for CEOs whose appointments appear to be unrelated to their predecessors' performance. Also consistent with the learning model is the fact that the learning curve appears to be convex in time, and learning is faster when there is higher ex ante uncertainty about the CEO's ability and more transparency about the firm's prospects. Overall, uncertainty about management quality appears to be an important source of stock return volatility."@en ;
    schema:exampleOfWork <http://worldcat.org/entity/work/id/1213478754> ;
    schema:inLanguage "en" ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/1213478754#Series/working_paper_series_national_bureau_of_economic_research> ; # Working paper series (National Bureau of Economic Research) ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/1213478754#Series/nber_working_paper_series> ; # NBER working paper series ;
    schema:name "Learning about CEO ability and stock return volatility"@en ;
    schema:productID "830293175" ;
    schema:publication <http://www.worldcat.org/title/-/oclc/830293175#PublicationEvent/cambridge_mass_national_bureau_of_economic_research_2013> ;
    schema:publisher <http://experiment.worldcat.org/entity/work/data/1213478754#Agent/national_bureau_of_economic_research> ; # National Bureau of Economic Research
    schema:url <http://papers.nber.org/papers/w18882> ;
    wdrs:describedby <http://www.worldcat.org/title/-/oclc/830293175> ;
    .


Related Entities

<http://experiment.worldcat.org/entity/work/data/1213478754#Agent/national_bureau_of_economic_research> # National Bureau of Economic Research
    a bgn:Agent ;
    schema:name "National Bureau of Economic Research" ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Person/want_tracy_yue> # Tracy Yue Want
    a schema:Person ;
    schema:familyName "Want" ;
    schema:givenName "Tracy Yue" ;
    schema:name "Tracy Yue Want" ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Place/cambridge_mass> # Cambridge, Mass.
    a schema:Place ;
    schema:name "Cambridge, Mass." ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Series/nber_working_paper_series> # NBER working paper series ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/830293175> ; # Learning about CEO ability and stock return volatility
    schema:name "NBER working paper series ;" ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Series/working_paper_series_national_bureau_of_economic_research> # Working paper series (National Bureau of Economic Research) ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/830293175> ; # Learning about CEO ability and stock return volatility
    schema:name "Working paper series (National Bureau of Economic Research) ;" ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Topic/chief_executive_officers_psychological_aspects_econometric_models> # Chief executive officers--Psychological aspects--Econometric models
    a schema:Intangible ;
    schema:hasPart <http://id.loc.gov/authorities/subjects/sh87002532> ;
    schema:name "Chief executive officers--Psychological aspects--Econometric models"@en ;
    .

<http://experiment.worldcat.org/entity/work/data/1213478754#Topic/corporate_governance_psychological_aspects_econometric_models> # Corporate governance--Psychological aspects--Econometric models
    a schema:Intangible ;
    schema:hasPart <http://id.loc.gov/authorities/subjects/sh88007569> ;
    schema:name "Corporate governance--Psychological aspects--Econometric models"@en ;
    .

<http://viaf.org/viaf/127108210> # National Bureau of Economic Research.
    a schema:Organization ;
    schema:name "National Bureau of Economic Research." ;
    .

<http://viaf.org/viaf/13384864> # Michael Steven Weisbach
    a schema:Person ;
    schema:familyName "Weisbach" ;
    schema:givenName "Michael Steven" ;
    schema:givenName "Michael S." ;
    schema:name "Michael Steven Weisbach" ;
    .

<http://viaf.org/viaf/297412132> # Yihui Pan
    a schema:Person ;
    schema:familyName "Pan" ;
    schema:givenName "Yihui" ;
    schema:name "Yihui Pan" ;
    .


Content-negotiable representations

Close Window

Please sign in to WorldCat 

Don't have an account? You can easily create a free account.