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CEO tenure and labor investment efficiency

Hui L. James et al.

Journal of Contemporary Accounting and Economics2025https://doi.org/10.1016/j.jcae.2025.100475article
AJG 2ABDC A
Weight
0.44

Abstract

We examine the impact of CEO tenure on corporate labor investment efficiency. While some studies show that CEO entrenchment increases in tenure (e.g., Hermalin and Weisbach, 1998 ), others argue that managerial expertise builds over time in the office (e.g., Graf-Vlachy et al., 2020 ). Using a large sample of U.S. firms from 1992 to 2018, we find that longer-tenured CEOs are associated with more efficient labor investment. This finding is robust to alternative measures of labor investment inefficiency, subsample analyses, and various model specifications. Further analysis shows that longer-tenured CEOs mitigate both under- and over-investment in labor problems characterized by under-hiring and under-firing, respectively. The positive effect of CEO tenure on labor investment efficiency is stronger in human capital-intensive firms and those with greater operational uncertainty. We conclude that advanced managerial expertise enables longer-tenured CEOs to invest in labor more accurately.

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https://doi.org/https://doi.org/10.1016/j.jcae.2025.100475

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@article{hui2025,
  title        = {{CEO tenure and labor investment efficiency}},
  author       = {Hui L. James et al.},
  journal      = {Journal of Contemporary Accounting and Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jcae.2025.100475},
}

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CEO tenure and labor investment efficiency

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Evidence weight

0.44

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.32 × 0.4 = 0.13
M · momentum0.57 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.