Management Turnover and Product Market Competition: Empirical Evidence from the U.S. Newspaper Industry

Abstract

We examine the relationship between management turnover and market structure for newspapers in 50 large cities from 1950 to 1993. We find that competitive markets display greater turnover rates than monopolistic markets and that turnover rates are increasing in the degree to which a newspaper trails its competition in market share. We find no evidence that the turnover-performance relationship varies with market structure. We discuss the implications of these findings for theories concerning competition and managerial employment contracting. The results appear most consistent with the hypothesis that the greater likelihood of liquidation in competitive markets leads to elevated turnover rates.

JEL Classification: G34, L11