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Managerial turnover and worker turnover

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  • Tribo Gine, José Antonio
  • Alfaro, José A.

Abstract

We study the influence of the manager's degree of consolidation within the firm over the firm's labor policy. We argue that non-consolidated (recently-appointed) managers are more worried about short-term results than consolidated managers are. This feature leads the former to bias the labor contracting favoring short-term contracts. This has two main consequences. First, a higher variation in the number of workers hired in each period. And second, a lower increase in unitary labor costs. To contrast these results, we use a database of 1.054 Spanish companies during the period (1994-98), and analyze their managerial turnover as well as their corresponding variation in the number of workers and in unitary labor costs. The theoretical results are confirmed, especially for highly-productive R and D-intensive firms.

Suggested Citation

  • Tribo Gine, José Antonio & Alfaro, José A., 2001. "Managerial turnover and worker turnover," DEE - Working Papers. Business Economics. WB wb011304, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
  • Handle: RePEc:cte:wbrepe:wb011304
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    References listed on IDEAS

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    1. Edward A. Dyl, 1988. "Corporate control and management compensation: Evidence on the agency problem," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 9(1), pages 21-25, March.
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    3. 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.
    4. Palley, Thomas I., 1997. "Managerial turnover and the theory of short-termism," Journal of Economic Behavior & Organization, Elsevier, vol. 32(4), pages 547-557, April.
    5. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
    6. Judith Chevalier & Glenn Ellison, 1999. "Career Concerns of Mutual Fund Managers," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 389-432.
    7. Hassink, Wolter H. J., 1996. "An empirical note on job turnover and internal mobility of workers," Economics Letters, Elsevier, vol. 51(3), pages 339-344, June.
    8. Rick Audas & Stephen Dobson & John Goddard, 1999. "Organizational performance and managerial turnover," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(6), pages 305-318.
    9. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
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