Work

The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies

Year: 2003

Type: report

Abstract: 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.

Source: National Bureau of Economic Research

DOI: 10.3386/w9633

Authors: Raghuram Rajan, Julie Wulf

Institutions: National Bureau of Economic Research, Harvard University, University of Chicago, Columbia University, University of Pennsylvania

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funder: National Science Foundation

OpenAlex ID: W3021286820

Cites: 37

Cited by: 66

Related to: 10