Coworker Complementarity and the Stability of Top-Management Teams

Posted: 29 Feb 2008

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

Abstract

We analyze changes in the composition of top management teams when a key member of the team (the chief executive officer [CEO]) departs. We find that the probability of non-CEO top manager turnover increases markedly around times of CEO turnover. Further, the magnitude of this increase depends on the relations between the tenure of the manager and tenures of the departing and incoming CEOs. Departure of a long-tenured CEO has a larger effect on turnover probability for a long-tenured non-CEO manager than for a short-tenured manager. Succession of a long-tenured manager as CEO has a larger effect on turnover probability for a short-tenured non-CEO manager than for a long-tenured manager. We argue that these findings are at least partially the result of complementarities across these groups of coworkers that affect the value of employment relationships between senior executives and firms.

Suggested Citation

Hayes, Rachel M. and Oyer, Paul and Schaefer, Scott, Coworker Complementarity and the Stability of Top-Management Teams. Journal of Law, Economics, and Organization, Vol. 22, No. 1, pp. 184-212, 2006, Available at SSRN: https://ssrn.com/abstract=915493

Rachel M. Hayes (Contact Author)

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

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

Paul Oyer

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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