Aging At The Very Top

Department: Finance

Speaker: Farzad Saidi (University of Bonn)

Room: TBD

Abstract

We document that since 2000 U.S. CEOs are on average 7 to 8 years older upon appointment. Using employment history data from BoardEx and LinkedIn, we show that this development is driven by later appointments and a greater variety of prior work experiences. Firms managed by older CEOs exhibit less dynamic profiles: they grow more slowly, take on less risk, and are less innovative in modern dimensions such as computing technology. We hypothesize that thesetrends reflect a shift toward generalist skills. Using exogenous variation in the proximity to strategy consulting firms and their employees, we show that firms increase their demand for generalist skills in response to greater industry-level uncertainty and complexity, and subsequently appoint older CEOs when young generalist consultants are not readily available. Our results also indicate that prospective CEOs strategically respond to these evolving skill requirements. Exploiting the network structure resulting from employment histories, we demonstrate that job mobility increases in response to positive information shocks about the value of job transitions.
In particular, workers are more likely to accept positions at lower seniority levels at other firms, reflecting that they are willing to sacrifice short-run wage growth for the longer-run purpose ofVacquiring generalist skills.