Firm Failure and Managerial Labor Markets: Evidence from Texas Banking

Journal of Financial Economics, Vol. 38, pp. 185-210, 1995

Posted: 5 Jun 2007

See all articles by Albert A. Cannella

Albert A. Cannella

affiliation not provided to SSRN

Donald R. Fraser

Texas A&M University - Department of Finance

D. Scott Lee

University of Nevada, Las Vegas - Lee Business School

Abstract

We study the managerial labor market's ability to discriminate between good and bad managerial performance. Using a sample of failed and non-failed Texas banks (matched by geographic location and size), we find that the context of job loss affects the manager's ability to regain comparable employment. Managers associated with banks that failed for reasons arguably beyond the managers' control were twice as likely to regain comparable banking posts as were managers at other failed banks. We also detect a relation between the probability of post-failure reemployment and a manager's rank within the firm (apparent accountability for the failure) and to proxies for managerial self-dealing and competence.

Keywords: Managerial labor markets, Management turnover, Financial distress, Relative-performance evaluation

JEL Classification: G21, G33, G34, J44

Suggested Citation

Cannella, Albert A. and Fraser, Donald R. and Lee, D. Scott, Firm Failure and Managerial Labor Markets: Evidence from Texas Banking. Journal of Financial Economics, Vol. 38, pp. 185-210, 1995, Available at SSRN: https://ssrn.com/abstract=5619

Albert A. Cannella

affiliation not provided to SSRN

Donald R. Fraser

Texas A&M University - Department of Finance ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-845- 2020 (Phone)

D. Scott Lee (Contact Author)

University of Nevada, Las Vegas - Lee Business School ( email )

4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States
702-895-2526 (Phone)
702-895-4630 (Fax)

HOME PAGE: http://faculty.unlv.edu/slee

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