Industry Information and the Market for Top Executives

Abstract

We study the effect of aggregate financial reporting on the market for top executives of private firms. More reporting within an industry is associated with more executive turnover. With more reporting, the newly appointed executives are more likely to be external, less experienced, and female. Reporting seems to help identify managerial skills: with more information, executives running underperforming firms are more likely to be fired, whereas those in charge of overperforming companies are more likely to be hired by larger companies. Except for industries with many family firms, the increase in executive turnover is associated with improved resource allocation.

Keywords: CEO labor market, CEO turnover, CEO gender, Private firms, Financial disclosure. JEL Codes: G14, G34