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Communication within Firms: Evidence from CEO Turnovers

Author

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  • Stephen Michael Impink
  • Andrea Prat
  • Raffaella Sadun

Abstract

This paper uses novel, firm-level communication measures derived from communications metadata several months before and after a CEO transition for 102 firms to study whether and how this organizational event is reflected in employees’ communication flows. We find that CEO turnover is associated with an initial decrease in intra-firm communication (-10% relative to the pre-CEO transition period), followed by a significant increase approximately five months after the CEO turnover (+33%). The increase in communications is driven primarily by inter-departmental (i.e. communication involving employees of different functional departments) and vertical (i.e. communication among managers and employees) communication flows. Firms where the medium-run increase in communication is higher experience greater increases in market returns and revenues in the year following the CEO transition.

Suggested Citation

  • Stephen Michael Impink & Andrea Prat & Raffaella Sadun, 2021. "Communication within Firms: Evidence from CEO Turnovers," NBER Working Papers 29042, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29042
    Note: PR
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    Cited by:

    1. Diego Battiston & Jordi Blanes i Vidal & Tom Kirchmaier & Katalin Szemeredi, 2023. "Peer pressure and manager pressure in organisations," CEP Discussion Papers dp1924, Centre for Economic Performance, LSE.
    2. Diogo Abry Guillen & Victor Monteiro, 2025. "An Organizational Structure Approach to Price Setting and Monetary Policy," Working Papers Series 638, Central Bank of Brazil, Research Department.

    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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