Working Paper: NBER ID: w29042
Authors: Stephen Michael Impink; Andrea Prat; Raffaella Sadun
Abstract: This paper uses novel, firm-level communication measures derived from communications metadata several months before and after a CEO transition for 102 firms to study whether and how this organizational event is reflected in employees’ communication flows. We find that CEO turnover is associated with an initial decrease in intra-firm communication (-10% relative to the pre-CEO transition period), followed by a significant increase approximately five months after the CEO turnover (+33%). The increase in communications is driven primarily by inter-departmental (i.e. communication involving employees of different functional departments) and vertical (i.e. communication among managers and employees) communication flows. Firms where the medium-run increase in communication is higher experience greater increases in market returns and revenues in the year following the CEO transition.
Keywords: CEO turnover; internal communication; organizational behavior; communication metadata
JEL Codes: L2; M12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CEO turnover (M12) | decrease in intrafirm communication (L96) |
| CEO turnover (M12) | increase in intrafirm communication (L22) |
| increase in intrafirm communication (L96) | increase in market returns and revenues (G19) |