The Benefits of Being Friends with the Boss

69 Pages Posted: 11 Mar 2019

See all articles by Steven Balsam

Steven Balsam

Temple University - Department of Accounting

So Yean Kwack

City University of Hong Kong (CityUHK) - Department of Accountancy

Date Written: March 4, 2019

Abstract

We investigate whether connections with the CEO established outside the firm increase the likelihood of an individual being promoted to be on the top management team (TMT), i.e., become one of the firms’ top five executives, and whether those connections increase the likelihood of a member of the TMT being appointed to the board of directors. We find evidence consistent with a connection increasing the likelihood of an individual being appointed to the TMT and the likelihood of a member of the TMT being appointed to the board of directors. We also evidence consistent with connections between the executive and the CEO reducing that executives’ likelihood of turnover. In cross-sectional analysis we provide some evidence consistent with our turnover results being associated with CEO power, as well as firm complexity, and our board appointment results being associated with CEO power.

Keywords: Executive turnover, Connections, Networks, Top Management Team

JEL Classification: G3, M51

Suggested Citation

Balsam, Steven and Kwack, So Yean, The Benefits of Being Friends with the Boss (March 4, 2019). Available at SSRN: https://ssrn.com/abstract=3346520 or http://dx.doi.org/10.2139/ssrn.3346520

Steven Balsam (Contact Author)

Temple University - Department of Accounting ( email )

306 Speakman Hall
Philadelphia, PA 19122
United States
215-204-5574 (Phone)
215-204-5587 (Fax)

HOME PAGE: http://www.sbm.temple.edu/~drb/

So Yean Kwack

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

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