Corporate Hierarchy

Michael Ewens and Xavier Giroud

No 34162, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We introduce a novel measure of corporate hierarchies for over 2,500 U.S. public firms. This measure is obtained from online resumes of 16 million employees and a network estimation technique that allows us to identify hierarchical layers. Equipped with this measure, we document several facts about corporate hierarchies. Firms have on average ten hierarchical layers and a pyramidal organizational structure. More hierarchical firms have a more educated workforce, higher internal promotion rates, and longer employee tenure. Their operating performance is higher, but they face higher administrative costs. They are more active acquirers and produce more patents, but not higher-quality patents. They exhibit lower stock return volatility and more stable cash flows. We also examine how companies adjust their hierarchies in response to demand and knowledge shocks. We find that biotech companies increased their number of layers following the Covid-19 pandemic, while companies flattened their hierarchies following the adoption of artificial intelligence (AI) technologies. These findings are consistent with the theoretical predictions of existing models of corporate hierarchies.

JEL-codes: D21 D23 G3 J24 L22 M12 M51 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-hrm, nep-lma and nep-net
Note: CF
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