The Benefits of Being Friends with the Boss
69 Pages Posted: 11 Mar 2019
Date Written: March 4, 2019
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: Suggested Citation