Hiring Lucky CEOs

46 Pages Posted: 22 Jun 2020 Last revised: 7 Mar 2022

See all articles by Mario Daniele Amore

Mario Daniele Amore

Bocconi University - Department of Management and Technology

Sebastian Schwenen

Technische Universität München (TUM); German Institute for Economic Research (DIW Berlin)

Multiple version iconThere are 2 versions of this paper

Date Written: March 4, 2022

Abstract

Existing works show 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 (in absolute terms and compared 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, we find that lucky CEOs lead to a substantial decline in the performance and growth of the hiring firm.

Keywords: Luck; CEOs; Compensation; Firm Performance; Corporate Governance

JEL Classification: G34, D86, J33, M12

Suggested Citation

Amore, Mario Daniele and Schwenen, Sebastian, Hiring Lucky CEOs (March 4, 2022). Available at SSRN: https://ssrn.com/abstract=3613544 or http://dx.doi.org/10.2139/ssrn.3613544

Mario Daniele Amore (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Sebastian Schwenen

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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