The Market for CEOs

The Market for CEOs

Peter Cziraki, Dirk Jenter

Series number :

Serial Number: 
831/2022

Date posted :

June 22 2022

Last revised :

June 22 2022
SSRN Share

Keywords

  • CEO labor markets • 
  • CEO-firm matching • 
  • assignment models • 
  • CEO turnover • 
  • CEO compensation

We study the market for CEOs of large publicly-traded US firms, analyze new CEOs’ prior connections to the hiring firm, and explore how hiring choices are determined. Firms are hiring from a surprisingly small pool of candidates. More than 80% of new CEOs are insiders, defined as current or former employees or board members.

Boards are already familiar with more than 90% of new CEOs, as they are either insiders or executives who directors have previously worked with. There are few reallocations of CEOs across firms – firms raid CEOs of other firms in only 3% of cases. Pay differences appear too small to explain these hiring choices. The evidence suggests that firm-specific human capital, asymmetric information, and other frictions have first-order effects on the assignment of CEOs to firms.

Authors

Real name:
Peter Cziraki
Real name:
Research Member
The London School of Economics and Political Science