Promotions, Turnover, and Performance Evaluation: Evidence from the Careers of Division Managers

42 Pages Posted: 21 Mar 2006 Last revised: 9 Jun 2010

See all articles by Michael Cichello

Michael Cichello

University of Maryland

C. Edward Fee

Tulane University - A.B. Freeman School of Business

Charles J. Hadlock

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Ramana Sonti

Indian School of Business

Date Written: December 16, 2008

Abstract

We study turnover and promotions of division managers in multidivisional firms. Turnover is negatively related to divisional accounting performance, positively related to industry performance, but not significantly related to firm performance or the performance of other divisions. Consistent with tournament theory, promotions are significantly related to whether one division is performing better than others, but are not significantly related to the magnitude of any performance difference. A simple performance metric, divisional ROA, appears more closely related to job allocation decisions than several alternatives. Our evidence is consistent with the hypothesis that accounting information is used by firms when evaluating managerial personnel.

Keywords: Turnover, Promotions, Internal labor markets, Performance measurement, Division managers

JEL Classification: J41, G34, M40, M46, M51, L22

Suggested Citation

Cichello, Michael and Fee, C. Edward and Hadlock, Charles J. and Sonti, Ramana, Promotions, Turnover, and Performance Evaluation: Evidence from the Careers of Division Managers (December 16, 2008). Accounting Review, Vol. 84, No. 4, pp. 1119-1143, July 2009, Available at SSRN: https://ssrn.com/abstract=892361

Michael Cichello

University of Maryland ( email )

College Park
College Park, MD 20742
United States

C. Edward Fee

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Charles J. Hadlock (Contact Author)

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

315 Eppley Center
East Lansing, MI 48824-1121
United States
517-353-9330 (Phone)
517-432-1080 (Fax)

Ramana Sonti

Indian School of Business ( email )

Gachibowli
Hyderabad, Andhra Pradesh 500 019
India
914023187103 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
678
Abstract Views
3,092
rank
45,893
PlumX Metrics