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Promotion, Turover and Compensation in the Executive Market

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This paper is an empirical study of the market for managers, more specifically the effects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed firms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst firms, which differ by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation.

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File URL: https://student-3k.tepper.cmu.edu/gsiadoc/wp/2008-E32.pdf
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Paper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2008-E32.

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Handle: RePEc:cmu:gsiawp:1216777356

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Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
Web page: http://www.tepper.cmu.edu/

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Web: http://student-3k.tepper.cmu.edu/gsiadoc/GSIA_WP.asp

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  1. Brian J. Hall & Jeffrey B. Liebman, 1997. "Are CEOs Really Paid Like Bureaucrats?," NBER Working Papers 6213, National Bureau of Economic Research, Inc.
  2. Esther Duflo & Rema Hanna, 2005. "Monitoring Works: Getting Teachers to Come to School," Working Papers id:301, eSocialSciences.
  3. Liran Einav & Amy Finkelstein & Paul Schrimpf, 2007. "The Welfare Cost of Asymmetric Information: Evidence from the U.K. Annuity Market," NBER Working Papers 13228, National Bureau of Economic Research, Inc.
  4. Drew Fudenberg & Bengt Holmstrom & Paul Milgrom, 1987. "Short-Term Contracts and Long-Term Agency Relationships," Working papers 468, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Patrick Bajari & Han Hong & Ahmed Khwaja, 2006. "Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis," NBER Working Papers 12445, National Bureau of Economic Research, Inc.
  6. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
  7. Margiotta, Mary M & Miller, Robert A, 2000. "Managerial Compensation and the Cost of Moral Hazard," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(3), pages 669-719, August.
  8. Dubois, Pierre & Vukina, Tomislav, 2006. "Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data," CEPR Discussion Papers 6011, C.E.P.R. Discussion Papers.
  9. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
  10. Masson, Robert Tempest, 1971. "Executive Motivations, Earnings, and Consequent Equity Performance," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1278-92, Nov.-Dec..
  11. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
  12. Ferrall, Christopher & Shearer, Bruce, 1999. "Incentives and Transactions Costs within the Firm: Estimating an Agency Model Using Payroll Records," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 309-38, April.
  13. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
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Cited by:
  1. Francesco Lippi & Fabiano Schivardi, 2010. "Corporate Control and Executive Selection," EIEF Working Papers Series 1014, Einaudi Institute for Economics and Finance (EIEF), revised Jul 2010.

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