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Co-worker Complementarity and the Stability of Top Management Teams

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Author Info
Hayes, Rachel M. (U of Chicago)
Oyer, Paul (Stanford U)
Schaefer, Scott (Northwestern U)

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Abstract

We analyze changes in the composition of top management teams when a key member of the team (the CEO) departs. We find that the probability of non-CEO top manager turnover increases markedly around times of CEO turnover. Further, the magnitude of this increase depends on the relations between the tenure of the manager and tenures of the departing and incoming CEOs. Departure of a long-tenured CEO increases the marginal effect of manager tenure on the CEO/manager turnover association. Succession of a long-tenured CEO decreases the marginal effect of manager tenure on the CEO/manager turnover association. We argue that these findings are at least partially the result of complementarities across these groups of co-workers that affect the value of employment relationships between senior executives and firms.

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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1846r.

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Date of creation: Jan 2005
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Handle: RePEc:ecl:stabus:1846r

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Agrawal, Anup & Knoeber, Charles R. & Tsoulouhas, Theofanis, 2006. "Are outsiders handicapped in CEO successions?," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 619-644, June. [Downloadable!] (restricted)
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  2. Eric Van den Steen, 2005. "Organizational Beliefs and Managerial Vision," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(1), pages 256-283, April. [Downloadable!] (restricted)
    Other versions:
  3. Edward P. Lazear & Sherwin Rosen, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Mikkelson, Wayne H. & Partch, M. Megan, 1997. "The decline of takeovers and disciplinary managerial turnover," Journal of Financial Economics, Elsevier, vol. 44(2), pages 205-228, May. [Downloadable!] (restricted)
  5. Warner, Jerold B. & Watts, Ross L. & Wruck, Karen H., 1988. "Stock prices and top management changes," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 461-492, January. [Downloadable!] (restricted)
  6. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January. [Downloadable!] (restricted)
  7. Barro, Jason R & Barro, Robert J, 1990. "Pay, Performance, and Turnover of Bank CEOs," Journal of Labor Economics, University of Chicago Press, vol. 8(4), pages 448-81, October. [Downloadable!] (restricted)
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  8. Mulherin, J. Harold & Poulsen, Annette B., 1998. "Proxy contests and corporate change: implications for shareholder wealth," Journal of Financial Economics, Elsevier, vol. 47(3), pages 279-313, March. [Downloadable!] (restricted)
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  10. Benjamin E. Hermalin & Michael S. Weisbach, 1996. "Endogenously Chosen Boards of Directors and Their Monitoring of the CEO," Working Papers _004, University of California at Berkeley, Haas School of Business. [Downloadable!]
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  11. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 225-38, January. [Downloadable!] (restricted)
  12. Benjamin E. Hermalin & Michael S. Weisbach, 1988. "The Determinants of Board Composition," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 589-606, Winter. [Downloadable!] (restricted)
  13. Kaplan, Steven N, 1994. "Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 510-46, June. [Downloadable!] (restricted)
  14. Hallock, Kevin F, 1998. "Layoffs, Top Executive Pay, and Firm Performance," American Economic Review, American Economic Association, vol. 88(4), pages 711-23, September. [Downloadable!] (restricted)
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  16. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-43, Nov.-Dec.. [Downloadable!] (restricted)
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  20. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October. [Downloadable!] (restricted)
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  21. Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier. [Downloadable!] (restricted)
  22. Parrino, Robert, 1997. "CEO turnover and outside succession A cross-sectional analysis," Journal of Financial Economics, Elsevier, vol. 46(2), pages 165-197, November. [Downloadable!] (restricted)
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  24. Weisbach, Michael S., 1995. "CEO turnover and the firm's investment decisions," Journal of Financial Economics, Elsevier, vol. 37(2), pages 159-188, February. [Downloadable!] (restricted)
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  1. Robert S. Huckman & Jason Barro, 2005. "Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals," NBER Working Papers 11182, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Anthony Marino & Jan Zabojnik, 2006. "Work-Related Perks, Agency Problems, and Optimal Incentive Contracts," Working Papers 1107, Queen's University, Department of Economics. [Downloadable!]
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  3. Alexandre Mas & Enrico Moretti, 2006. "Peers at Work," IZA Discussion Papers 2292, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Landier, Augustin & Sraer, David & Thesmar, David, 2006. "Bottom-Up Corporate Governance," CEPR Discussion Papers 5500, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Paul Oyer, 2006. "The Macro-Foundations of Microeconomics: Initial Labor Market Conditions and Long-Term Outcomes for Economists," NBER Working Papers 12157, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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