The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies / Raghuram Rajan, Julie Wulf.

Format:

Book

Author/Creator:

Rajan, Raghuram.

Contributor:

National Bureau of Economic Research.

Wulf, Julie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9633.

NBER working paper series no. w9633

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Flattening Firm

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Using a detailed database of managerial job descriptions, reporting relationships, and compensation structures in over 300 large U.S. firms, we find that firm hierarchies are becoming flatter. The number of positions reporting directly to the CEO has gone up significantly over time while the number of levels between the lowest managers with profit center responsibility (division heads) and the CEO has decreased. More of these managers now report directly to the CEO and more are being appointed officers of the firm, reflecting a delegation of authority. Moreover, division managers who move closer to the CEO receive higher pay and greater long term incentives, suggesting that all this is not simply a change in organizational charts with no real consequences. We discuss several possible explanations that may account for some of these changes.

Notes:

Print version record

April 2003.