Geography and the Market for CEOs
Scott E. Yonker
Cornell University - Dyson School of Applied Economics and Management
November 11, 2014
I examine the role of geography in the market for CEOs and find that firms hire locally five times more often than expected if geography were irrelevant to the matching process. This local matching bias is widespread and exists even among the largest U.S. firms. Tests reveal that local geographic preferences of CEOs are likely influencing the matching outcomes. Compensation and turnover are lower for local than for non-local CEOs, and unlike non-local CEOs, the compensation of locals depends on local labor market factors. These findings change the prior in the finance literature that CEO labor markets for large U.S. corporations are national markets.
Number of Pages in PDF File: 53
Keywords: CEO, geography, corporate finance
JEL Classification: G30, G34
Date posted: June 16, 2010 ; Last revised: November 15, 2014
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