Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 1, 2022 erstellt
Beschreibung:
We study the role of connections between CEOs and division managers in managerial career outcomes. Holding divisional and managerial characteristics constant, we find that CEOs are substantially less likely to dismiss division managers with whom they share a personal connection. Additionally, the sensitivity of turnover to divisional performance is significantly smaller for more connected division managers relative to others. These findings hold even when we consider CEO-division manager relationships that are more likely to arise for exogenous reasons, suggesting a causal role for personal connections in how managers are treated in a firm’s internal labor market. Complementing this evidence, we find that division managers connected to the CEO are relatively more likely to be promoted within the firm. Evidently, having friends in high places is associated with increased job security and improved internal job mobility. Turning to the external labor market, we find that dismissed division managers who were connected to the CEO fare particularly poorly in the external labor market, suggesting that the ability floor leading to the dismissal of a connected manager is particularly low. These findings offer novel insights on, and implications for, organizational design