Corporate Social Performance and Managerial Labor Market

Abstract

This paper examines the impact of a firm’s social performance on the CEO’s employment prospects. We track departing CEOs’ subsequent employment records and find that the social performance of their previous employers improves their labor market outcomes. These CEOs are more likely to find a new executive position, and the new employer is more likely to be a publicly traded company. For the subsample of CEOs finding new executive positions at public firms, we find that a CEO whose previous employer has stronger social performance is more likely to move up to a larger firm. Finally, using a Cox proportional hazard model, we find that strong social performance of the previous employer helps CEOs find their next executive positions sooner. Overall, our results suggest that corporate social performance enhances CEOs’ labor market potentials.