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What Do CEOs Do?

  • Oriana Bandiera

    (London School of Economics)

  • Luigi Guiso

    (European University Institute and EIEF)

  • Andrea Prat

    (London School of Economics)

  • Raffaella Sadun

    (Harvard University)

We develop a methodology to collect and analyze data on CEOs’ time use. The idea – sketched out in a simple theoretical set-up – is that CEO time is a scarce resource and its allocation can help us identify the firm’s priorities as well as the presence of governance issues. We follow 94 CEOs of top-600 Italian firms over a pre-specified week and record the time devoted each day to different work activities. We focus on the distinction between time spent with insiders (employees of the firm) and outsiders (people not employed by the firm). Individual CEOs differ systematically in how much time they spend at work and in how much time they devote to insiders vs. outsiders. We analyze the correlation between time use, managerial effort, quality of governance and firm performance, and interpret the empirical findings within two versions of our model, one with effective and one with imperfect corporate governance. The patterns we observe are consistent with the hypothesis that time spent with outsiders is on average less beneficial to the firm and more beneficial to the CEO and that the CEO spends more time with outsiders when governance is poor.

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Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 1101.

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Length: 32 pages
Date of creation: 2011
Date of revision: Oct 2010
Handle: RePEc:eie:wpaper:1101
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  1. Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2012. "Trust and Cheating," NBER Working Papers 18509, National Bureau of Economic Research, Inc.
  2. Nicholas Bloom & John Van Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 203-24, Winter.
  3. Alan B. Krueger & Andreas Mueller, 2008. "Job Search and Unemployment Insurance: New Evidence from Time Use Data," Working Papers 1093, Princeton University, Department of Economics, Center for Economic Policy Studies..
  4. Mathias Dewatripont & Patrick Bolton, 2004. "The firm as a communication network," ULB Institutional Repository 2013/9599, ULB -- Universite Libre de Bruxelles.
  5. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2012. "Matching Firms, Managers, and Incentives," CEP Discussion Papers dp1144, Centre for Economic Performance, LSE.
  6. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
  7. Nicholas Bloom & Christos Genakos & Raffaella Sadun & John Van Reenen, 2012. "Management Practices Across Firms and Countries," NBER Working Papers 17850, National Bureau of Economic Research, Inc.
  8. Mark Aguiar & Erik Hurst, 2007. "Measuring Trends in Leisure: The Allocation of Time over Five Decades," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 969-1006, 08.
  9. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
  10. Marianne Bertrand & Antoinette Schoar, 2003. "Managing With Style: The Effect Of Managers On Firm Policies," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1169-1208, November.
  11. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58.
  12. Yermack, David, 1996. "Higher market valuation of companies with a small board of directors," Journal of Financial Economics, Elsevier, vol. 40(2), pages 185-211, February.
  13. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-35, May.
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