Download This PaperHiring Lucky CEOs
49 Pages Posted: 22 Jun 2020 Last revised: 6 Sep 2022
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Hiring Lucky CEOs
The Value of Luck in the Labor Market for CEOS
Date Written: March 4, 2022
Abstract
Existing research shows that luck increases CEOs’ pay at their current firm. In this work, we explore how luck affects: (1) CEOs’ employment opportunities, and (2) the performance of firms that hire lucky CEOs. Our results indicate that luck increases the likelihood to get a CEO job at new companies. Conditional on moving, lucky CEOs obtain a higher pay (both in absolute terms and relative to new industry peers) mostly due to higher incentive pay. Moreover, lucky CEOs tend to be hired by firms operating in less competitive industries. Despite the higher compensation they receive, the appointment of lucky CEOs is associated with a substantial decline in firm performance.
Keywords: Luck; CEOs; Compensation; Firm Performance; Corporate Governance
JEL Classification: G34, D86, J33, M12
Suggested Citation: Suggested Citation
Mario Daniele Amore (Contact Author)
Bocconi University - Department of Management and Technology ( email )
Via Roentgen 1
Milan, MI 20136
Italy
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium