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Managerial ability and success: Evidence from the career paths of film directors

Kose John, S. Abraham Ravid and Jayanthi Sunder

Journal of Corporate Finance, 2017, vol. 44, issue C, 425-439

Abstract: We use a unique hand-collected data set covering the entire career path of film directors, who are re-hired (or not) after each and every film project. Film directors manage projects which can cost hundreds of millions of dollars. We examine the inter-temporal dynamics of turnover decisions to disentangle ability revelation from effort incentives and measure the contribution of project managers to project success. We show that the probability of re-hiring is increasing in average returns over an entire career path, rather than just the outcome of the most recent project, supporting an ability revelation interpretation. We also find that promotions are increasing in directors' experience. We create an ability measure for directors, and show that directors can have a significant effect on the financial and critical success of their projects. Our evidence can inform the debate on CEO effects on their firms and projects and contribute to the CEO and executive turnover literature.

Keywords: Managerial ability; Job matching; Film directors; Career path (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:corfin:v:44:y:2017:i:c:p:425-439