CEO identity and labor contracts: Evidence from CEO transitions
This paper assesses how CEO transitions shape labor contracts within firms. We argue that family links between a new CEO and his predecessor act as a commitment device for upholding implicit contracts with the workforce. Consistent with this view, we find evidence of a wage insurance mechanism durin...
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| Veröffentlicht in: | Journal of corporate finance (Amsterdam, Netherlands) Netherlands), 2015-08, Vol.33, p.227-242 |
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| container_title | Journal of corporate finance (Amsterdam, Netherlands) |
| container_volume | 33 |
| creator | Bach, Laurent Serrano-Velarde, Nicolas |
| description | This paper assesses how CEO transitions shape labor contracts within firms. We argue that family links between a new CEO and his predecessor act as a commitment device for upholding implicit contracts with the workforce. Consistent with this view, we find evidence of a wage insurance mechanism during a CEO transition. Dynastically-promoted CEOs relative to external CEOs are associated with up to 25% less job separations and 20% lower wage growth. Crucially, we show that differences, in terms of job separations, between dynastic and non-dynastic CEO successions are significantly greater when labor markets are more frictional. |
| doi_str_mv | 10.1016/j.jcorpfin.2015.01.009 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0929-1199 |
| ispartof | Journal of corporate finance (Amsterdam, Netherlands), 2015-08, Vol.33, p.227-242 |
| issn | 0929-1199 1872-6313 1872-6313 |
| language | eng |
| recordid | cdi_swepub_primary_oai_hhs_se_1155146900006056 |
| source | Elsevier ScienceDirect Journals |
| subjects | CEO choice Chief executive officers Dynastic management Executive compensation Labor contracts Severance pay Studies Successors Workforce |
| title | CEO identity and labor contracts: Evidence from CEO transitions |
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