Management Turnover in Subsidiaries of Conglomerates Versus Standalone Firms

University of South Carolina Working Paper

39 Pages Posted: 8 Jan 2002

See all articles by Chris R. McNeil

Chris R. McNeil

affiliation not provided to SSRN

Greg Niehaus

University of South Carolina - Darla Moore School of Business

Eric A. Powers

University of South Carolina - Darla Moore School of Business

Date Written: June 2002

Abstract

An extensive prior literature documents the sensitivity of CEO turnover to performance. However, little is known about turnover in the firm's internal labor market. We compare the likelihood of turnover following poor performance for a sample of subsidiary managers inside conglomerate firms to the likelihood of turnover of CEOs of comparable stand-alone firms. After controlling for a number of other factors, we find that subsidiary managers have a significantly higher likelihood of turnover following poor performance than CEOs of comparable stand-alone firms.

Keywords: Conglomerate discount, diversification discount, internal labor markets, internal capital markets, management turnover, principal agent, incentive compensation

JEL Classification: G3

Suggested Citation

McNeil, Christopher R. and Niehaus, Greg and Powers, Eric A., Management Turnover in Subsidiaries of Conglomerates Versus Standalone Firms (June 2002). University of South Carolina Working Paper. Available at SSRN: https://ssrn.com/abstract=296220 or http://dx.doi.org/10.2139/ssrn.296220

Christopher R. McNeil

affiliation not provided to SSRN

Greg Niehaus

University of South Carolina - Darla Moore School of Business ( email )

College of Business Administration
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-7254 (Phone)
803-777-6876 (Fax)

Eric A. Powers (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-4928 (Phone)

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