Organizational complexity and CEO labor markets: Evidence from diversified firms |
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| Institution: | 1. Miami University, 800 E. High St. 2053 FSB, Oxford, OH 45056, USA;1. Monash University, Australia;2. University of Lethbridge, Canada;3. La Trobe University, Australia;1. School of Economics and Management, Tsinghua University, China;2. Leonard N. Stern School of Business, New York University, United States;3. College of Business, City University of Hong Kong, Hong Kong SAR, China;1. College of Business, Florida State University, Tallahassee, FL, USA;2. Rotterdam School of Management, Erasmus University, Rotterdam, The Netherlands;3. University of Groningen, Groningen, The Netherlands |
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| Abstract: | We examine whether CEO turnover and succession patterns vary with firm complexity. Specifically, we compare CEO turnover in diversified versus focused firms. We find that CEO turnover in diversified firms is completely insensitive to both accounting and stock-price performance, but CEO turnover in focused firms is sensitive to firm performance. Diversified firms also experience less forced turnover than focused firms. Following turnover, replacement CEOs in diversified firms are older, more educated, and are paid more when hired. Collectively, our results indicate that the labor market for CEOs is different across diversified and focused firms and that firm complexity and scope affect CEO succession. |
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