The role of financial performance in the recruitment of executives: A network approach (original) (raw)

2018

Abstract

Drawing from two long standing traditions in organizational studies, executive manager recruitment and shareholder value creation, we analyze managerial migrations from the perspective of investment and financing decision-making. In two samples of large companies in the UK, cohorts of executive managers observed between 2006 and 2016 are examined applying network models, by comparing residual income between originating and recruiting firms and isolating exogenous residual income growth. In managerial migrations between firms during this period, differences in residual income were greatest where migrations occurred across industries or from different sized firms within industries. This indicates that executive experience of high performance is valued by firms recruiting across or within industries and thus supports the view that emulation of other firms practices is an important driver of executive recruitment.

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