Top Executive Mobility and Firm Specific Skills
Speaker
Abstract
| This paper studies the impact of firm specific skills on the mobility and compensation of top executives. With the help of a simple model, I develop a set of empirical predictions on the cross-industry differences in the probability of internal promotions, the level of executive compensation and the pay differential between externally hired and internally promoted managers. These predictions are then tested on firm level data from the US by using the tenure of non-managerial workers as a proxy for the importance of firm specific skills. As predicted by my model, an increase in the importance of firm specific skills both raises the probability of internal promotion and decreases their total compensation. Moreover, the compensation differential between externally appointed and internally promoted managers increases with the importance of firm specific skills. Finally, I find evidence consistent with the view that firm specific skills are more important during expansion (growth) periods than during recession (downsizing) periods. |
| Contact information: |
| Myra Lissenberg |
