Promotion, Turnover and Compensation in the Executive Market

This paper is an empirical study of the market for managers, more speci…cally the e¤ects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed …rms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst …rms, which di¤er by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation.