Passing the Mic: Career and Firm Outcomes of Executive Interactions

58 Pages Posted: 14 Oct 2021 Last revised: 2 May 2022

See all articles by Wei Cai

Wei Cai

Columbia Business School

Ethan Rouen

Harvard Business School

Yuan Zou

Harvard University - Business School (HBS)

Date Written: May 1, 2022

Abstract

We exploit a unique feature of conference calls to study one type of interaction among executives — directly inviting colleagues to respond to analysts’ questions. We find that the frequency of initiating interaction is positively associated with an executive’s ability, but not associated with firm performance. When new CEOs initiate more interactions than their predecessors, interaction among the rest of the executive team also increases, suggesting a learning effect. Turning to the outcomes of this practice, we find that executives who initiate more interactions than their peers are twice as likely as the average executive to be promoted to CEO. What is more, appointing CEOs who initiate more interactions than their predecessors results in an average three-day abnormal return of 0.9% around the announcement of the appointment. Teams composed of executives who interact with each other more frequently also have greater retention. Lastly, firms in which new CEOs initiate more interactions than their predecessors experience higher growth in Tobin’s Q, a result that is concentrated among growth and R&D-intensive firms.

Suggested Citation

Cai, Wei and Rouen, Ethan and Zou, Yuan, Passing the Mic: Career and Firm Outcomes of Executive Interactions (May 1, 2022). Available at SSRN: https://ssrn.com/abstract=3942049 or http://dx.doi.org/10.2139/ssrn.3942049

Wei Cai

Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Ethan Rouen

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6275 (Phone)

HOME PAGE: http://www.ethanrouen.com

Yuan Zou (Contact Author)

Harvard University - Business School (HBS)

Soldiers Field Road
Morgan 362
Boston, MA 02163
United States

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