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Hiring Lucky CEOs

Author

Listed:
  • Mario Daniele Amore
  • Sebastian Schwenen

Abstract

Existing research shows that luck increases CEOs’ pay at their current firm. In this work, we explore how luck affects: (1) CEOs’ employment opportunities and (2) the performance of firms that hire lucky CEOs. Our results indicate that luck increases the likelihood to get a CEO job at new companies. Conditional on moving, lucky CEOs obtain a higher pay (both in absolute terms and relative to new industry peers) mostly due to higher incentive pay. Moreover, lucky CEOs tend to be hired by firms operating in less competitive industries. Despite the higher compensation they receive, the appointment of lucky CEOs is associated with a substantial decline in firm performance. (JEL: G34, D86, J33, M12)

Suggested Citation

  • Mario Daniele Amore & Sebastian Schwenen, 2024. "Hiring Lucky CEOs," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 40(3), pages 571-596.
    • Handle: RePEc:oup:jleorg:v:40:y:2024:i:3:p:571-596.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewac021
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    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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