Abstract
This literature review provides an overview of existing studies in the area of managerial style and its effect on firms’ strategic decisions and performance. It highlights which managers’ characteristics have been considered as determinants for managerial style so far and provides potential avenues for future research. After analyzing the content of all articles that were published in seven top-tier journals in the area of finance and banking between 2000 and 2016, the articles on managerial style were included in this literature review and categorized according to the main manager characteristic of investigation. The paper illustrates how similar characteristics are measured differently, and how different measurements of manager’s influence the managerial style−firm strategy relationship differentially. We provide avenues for future research in the area of managerial style, that is, future research may investigate board member’s characteristics at a more aggregated level (board level). Also, future research may shed more light on the argumentation of whether managers’ individual style influences the firm’s corporate decision or whether managers endogenously choose the firm due to their individual characteristics that match with the firm’s strategy and vice versa. This study is interesting for firms that aim to find a manager or director who fits well to its own strategy. Although there is a rapidly growing literature on managerial style, there is yet no literature review that analysis research themes and strings on managerial style in finance journals.
Highlights
IntroductionThese Econs solve problems like a super computer, have the willpower of saints, are free of emotion, and have little regard for their fellow Econs
In line with our hypothesis, most studies do find a significant relationship between managerial styles and firm outcomes
We review articles in the area of managerial style and its effect on firms’ strategic decisions and performance
Summary
These Econs solve problems like a super computer, have the willpower of saints, are free of emotion, and have little regard for their fellow Econs. Humans are considered as a species with the intelligence of a supercomputer and never-ending power of volition, free of emotions and powered by egotistical motives. These attributes exaggeratedly meet the assumption of a rational, utility-maximizing and perfectly informed agent in economic models (Bofinger, 2011). Traditional models alone cannot help to identify reasons for heterogeneous capital structures (Lemmon, Roberts, & Zender, 2008). Bertrand and Schoar (2003) conclude there must be some other factors and models that cause and explain heterogeneous investment and financing decisions
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