Working Paper: CEPR ID: DP8235
Authors: Oriana Bandiera; Luigi Guiso; Andrea Prat; Raffaella Sadun
Abstract: We develop a methodology to collect and analyze data on CEOs' time use. The idea - sketched out in a simple theoretical set-up - is that CEO time is a scarce resource and its allocation can help us identify the firm's priorities as well as the presence of governance issues. We follow 94 CEOs of top-600 Italian firms over a pre-specified week and record the time devoted each day to different work activities. We focus on the distinction between time spent with insiders (employees of the firm) and outsiders (people not employed by the firm). Individual CEOs differ systematically in how much time they spend at work and in how much time they devote to insiders vs. outsiders. We analyze the correlation between time use, managerial effort, quality of governance and firm performance, and interpret the empirical findings within two versions of our model, one with effective and one with imperfect corporate governance. The patterns we observe are consistent with the hypothesis that time spent with outsiders is on average less beneficial to the firm and more beneficial to the CEO and that the CEO spends more time with outsiders when governance is poor.
Keywords: CEOs; Corporate Governance; Time Use
JEL Codes: D2; G3; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Longer working hours (J29) | More time spent with insiders (G14) |
| Longer working hours (J29) | Less time spent with outsiders (Z13) |
| Better governance (H11) | More time spent with insiders (G14) |
| Better governance (H11) | Less time spent with outsiders (Z13) |
| Time spent with insiders (G14) | Firm performance (L25) |
| Time spent with outsiders (Z13) | Firm performance (L25) |