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Chief Executive Officer Careers in Regulated Environments: Evidence from Electric and Gas Utilities

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  • Hadlock, Charles J
  • Lee, D Scott
  • Parrino, Robert

Abstract

We compare chief executive officers (CEOs) of electric and gas utility firms with CEOs of unregulated firms. Utility CEOs tend to be older when appointed to office, have less-prestigious educational backgrounds, and are more likely to have a legal background. Despite these differences, the evidence indicates that the likelihood of utility CEO turnover is at least as sensitive to stock performance as the likelihood of turnover among CEOs of unregulated firms. We find no convincing evidence that utility CEOs stay in office longer than their unregulated counterparts, although they are less likely to be overtly forced from office or replaced by an executive from outside the firm. Finally, the evidence suggests that regulatory expertise is valued in the selection of new utility CEOs. Copyright 2002 by the University of Chicago.

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  • Hadlock, Charles J & Lee, D Scott & Parrino, Robert, 2002. "Chief Executive Officer Careers in Regulated Environments: Evidence from Electric and Gas Utilities," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 535-563, October.
    • Handle: RePEc:ucp:jlawec:v:45:y:2002:i:2:p:535-63
    DOI: 10.1086/340391
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    2. Powers, Eric A., 2005. "Interpreting logit regressions with interaction terms: an application to the management turnover literature," Journal of Corporate Finance, Elsevier, vol. 11(3), pages 504-522, June.
    3. Jivas Chakravarthy & Katie E. McDermott & Roger M. White, 2021. "Are Regulators Effective at Unraveling Accounting Manipulation? Evidence from Public Utility Commissions," Management Science, INFORMS, vol. 67(7), pages 4532-4555, July.
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