Stability of Top Management Teams

44 Pages Posted: 25 May 2002

See all articles by Rachel M. Hayes

Rachel M. Hayes

University of Utah - David Eccles School of Business

Paul Oyer

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Scott Schaefer

University of Utah - Department of Finance

Date Written: May 2002

Abstract

We identify several theories that each suggest a link between CEO turnover and changes among a firm's top non-CEO managers. We then assess these links empirically using two panel data sets. We present five main findings. First, we find that CEO and non-CEO turnover are positively associated. Second, we do not find that this association is stronger when firm performance is poor. Third, this association is driven largely by instances of outside CEO succession. Fourth, the association between CEO and non-CEO changes persists; even the year after CEO turnover, non-CEO managers are more likely to leave the firm's top management group. Fifth, changes in the identities of non-CEO managers are more closely associated with subsequent organizational changes than is CEO turnover. We interpret these results as being consistent with theories in which non-CEO managers make investments in human capital that is specific to co-workers, and specific to the firm's current practices or strategy.

Keywords: executive turnover

JEL Classification: J44, G30

Suggested Citation

Hayes, Rachel M. and Oyer, Paul and Schaefer, Scott, Stability of Top Management Teams (May 2002). Available at SSRN: https://ssrn.com/abstract=310629 or http://dx.doi.org/10.2139/ssrn.310629

Rachel M. Hayes

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Paul Oyer (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-736-1047 (Phone)
650-725-0468 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Scott Schaefer

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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