ABSTRACT: We study turnover and promotions of division managers in multidivisional firms. Turnover is negatively related to divisional accounting performance, positively related to industry performance, but not significantly related to firm performance or the performance of other divisions. Consistent with tournament theory, promotions are significantly related to whether one division is performing better than others, but are not significantly related to the magnitude of any performance difference. A simple performance metric, divisional ROA, appears more closely related to job allocation decisions than several alternatives. Our evidence is consistent with the hypothesis that accounting information is used by firms when evaluating managerial personnel.
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1 July 2009
Research Article|
July 01 2009
Promotions, Turnover, and Performance Evaluation: Evidence from the Careers of Division Managers
Michael S. Cichello;
Michael S. Cichello
University of Pennsylvania.
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Charles J. Hadlock;
Charles J. Hadlock
Michigan State University.
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Ramana Sonti
Ramana Sonti
Indian School of Business.
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The Accounting Review (2009) 84 (4): 1119–1143.
Citation
Michael S. Cichello, C. Edward Fee, Charles J. Hadlock, Ramana Sonti; Promotions, Turnover, and Performance Evaluation: Evidence from the Careers of Division Managers. The Accounting Review 1 July 2009; 84 (4): 1119–1143. doi: https://doi.org/10.2308/accr.2009.84.4.1119
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