The Accounting Review Vol. 84 No. 4 2009

Promotions, Turnover, and Performance Evaluation: Evidence from the Careers of Division Managers

Michael S. Cichello¹; C. Edward Fee²; Charles J. Hadlock²; Ramana Sonti³

¹ University of Pennsylvania · ² Michigan State University · ³ Indian School of Business

Abstract

We study turnover and promotions of division managers in multidivisional firms. Turnover is negatively related to divisional accounting performance, positively related to industry performance, but not significantly related to firm performance or the performance of other divisions. Consistent with tournament theory, promotions are significantly related to whether one division is performing better than others, but are not significantly related to the magnitude of any performance difference. A simple performance metric, divisional ROA, appears more closely related to job allocation decisions than several alternatives. Our evidence is consistent with the hypothesis that accounting information is used by firms when evaluating managerial personnel.

DOI

10.2308/accr.2009.84.4.1119

Volume

84

Issue

4

Pages

1119-1143

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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