Do good starts make good finishes? The case of CEO pay

Cimerova, H
Item type
Degree name
Journal Title
Journal ISSN
Volume Title
The Faculty of Business and Law, Auckland University of Technology

We study the effects of job market conditions at the start of future CEOs' careers. We find no evidence of persistent rewards for US public firms' CEOs for starting their career in more successful firms, or for the luck of entering the job market in a good economy. Rather, we show that long-term effects are countercyclical as those executives who start their careers in a recession earn a higher CEO pay, consistent with selection. We also find that initial job conditions may yield a higher first CEO compensation but the positive effect dissipates over time. While related labor market research points to procyclical cohort effects and suggests that favorable initial conditions positively affect careers in the long run, our findings support the notion that the market for CEOs is efficient.

CEO compensation , Efficiency of the market for executives , Cohort effects , Business cycle
Presented at the 2014 New Zealand Finance Colloquium held at the Faculty of Business and Law, Auckland University of Technology, City Campus. 2014-02-13 to 2014-02-14.
Rights statement
Auckland University of Technology (AUT) encourages public access to AUT information and supports the legal use of copyright material in accordance with the Copyright Act 1994 (the Act) and the Privacy Act 1993. Unless otherwise stated, copyright material contained on this site may be in the intellectual property of AUT, a member of staff or third parties. Any commercial exploitation of this material is expressly prohibited without the written permission of the owner.