The Market for CEOs

Dirk Jenter and Peter Cziraki

No 16281, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the market for CEOs of large publicly-traded US firms, analyze new CEOs’ prior connections to the hiring firm, and explore how hiring choices are determined. Firms are hiring from a surprisingly small pool of candidates. More than 80% of new CEOs are insiders, defined as current or former employees or board members. Boards are already familiar with more than 90% of new CEOs, as they are either insiders or executives who directors have previously worked with. There are few reallocations of CEOs across firms - firms raid CEOs of other firms in only 3% of cases. Pay differences appear too small to explain these hiring choices. The evidence suggests that firm-specific human capital, asymmetric information, and other frictions have first-order effects on the assignment of CEOs to firms.

Keywords: Ceo labor markets; Ceo-firm matching; Assignment models; Ceo compensation (search for similar items in EconPapers)
JEL-codes: D22 G34 M12 M51 (search for similar items in EconPapers)
Date: 2021-06
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Working Paper: The Market for CEOs (2021)
Working Paper: The market for CEOs (2021)
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