Journal of Financial and Quantitative Analysis Vol. 60 No. 4 2025
Protecting Your Friends: The Role of Connections in Division Manager Careers
Abstract
We find that division managers who are connected to the CEO are substantially less likely than others to depart from the firm and are more likely to be promoted. Connected managers are protected when performance is poor, and they display no special ability to improve performance given this protection. Connections matter more in weak governance/incentive environments, and the external labor market and stock market appear skeptical of connected managers’ talents. While much of the evidence suggests inefficient favoritism, connected managers are protected more in peripheral segments, suggesting a possible efficiency benefit in helping to resolve intrafirm information problems.
- DOI
- 10.1017/s0022109024000334
- Volume
- 60
- Issue
- 4
- Pages
- 2026-2059
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex