Better Together? Ceo Identity and Firm Productivity
Ines Black (Duke University Fuqua School of Business)

Abstract : This paper analyzes the relationship between CEO quality and firm productivity in the private sector using top-manager/CEO job transitions. Using a matched employer-employee data set, I attempt to disentangle the role of the CEO type (identity) from that of the firm in revenue productivity and evaluate the existence and relevance of match complementarities between CEO and firm types. I present a proxy measure of CEO quality that takes advantage of differential patterns of CEO mobility throughout their careers to circumvent endogenous CEO job mobility. I find that a one-standard deviation increase in CEO quality results in 5% increase in firm production. Higher quality CEOs are more likely to hold a higher education degree, have a larger experience as a manager, invest in innovation and less likely to work in a family firm. More strikingly, results indicate that CEO-firm complementarities represent about half of the CEO’s impact in firm revenue productivity. The issue of CEO impact is of significant practical importance to firms and policy makers alike, as it can partly explain the rise in wage inequality.

Personality Traits and Job-worker Match: Evidence from a Personnel Services Firm
Anna Daelen (Goethe University Frankfurt)
Guido Friebel (Goethe University Frankfurt)
Matthias Heinz (University of Cologne)
Nick Zubanov (University of Konstanz)

Abstract : We study the association between job applicants’ personality characteristics and their match to the job. Our unique data come from around 200 of new hires in a major personnel services firm, and consist of “big five” personality characteristics, risk attitudes and intertemporal choice preferences matched with their personnel records. We find a robust link between the likelihood of staying on the job and the personality trait of conscientiousness (self-discipline and dutifulness). The correlations between turnover and other personality traits are less robust to specification. Our study contributes to the literature on the importance of personality traits for performance on the job by (i) validating its findings in a setting that is robust to applicants’ “gaming” the results to improve their chances; (ii) using very detailed data; and (iii) applying a broad battery of methods, including machine learning techniques.

Why and when Family Firms Are Doing the Right Thing when Hiring a Family Manager with Low Skills in Economic Tasks
Jenny Kragl (EBS University of Business and Law)
Alberto Palermo (Institute for Labour Law and Industrial Relations)
Guoqian Xi (Shanghai University of Finance and Economics)
Joern H. Block (University of Trier)

Abstract : Prior economic research is very critical about family CEOs and family management. Nepotism, altruism, lower managerial abilities, and a small pool of qualified family candidates are cited as reasons that speak against family management. Still, the empirical reality is different. A surprisingly large share of firms is run by family managers. Our study provides a rational economic explanation for this paradox, linked to the multitasking problem in managing family firms. We compare the performance of family and non-family managers in a moral-hazard model with imperfect performance measures, where managerial tasks are related to the economic and non-economic goals of the business-owning family. While incentive pay is more effective for nonfamily managers, the associated effort distortion towards economic outcomes is less pronounced for family managers. When economic and non-economic tasks are strong substitutes, the family hires a non-family manager at the expense of its non-economic goals. However, the more complementary the tasks, the more aligned the performance measure with the family's goals, and the less severe the moral-hazard conflict, the more likely a family manager is optimal. We find that family managers can be preferred even if they have lower ability than non-family managers on average. Our study contributes to the literature about family management and agency costs in family firms and has practical implications for family businesses deciding between hiring managers in or outside the family.