Contemporary Accting Res - 2024 - Abernethy - Managers Career Preferences and Corporate Culture

Received: 20 January 2021 Accepted: 14 March 2024
DOI: 10.1111/1911-3846.12948
ARTICLE
Managers’ career preferences and corporate culture
Margaret A. Abernethy | Chung-Yu Hung | Like Jiang
Faculty of Business and Economics, Abstract

Department of Accounting, The University of
Melbourne, Carlton, Victoria, Australia
Building effective corporate culture is challenging as it
requires senior managers to embed shared values within
Correspondence the firm. Yet some firms can do so, and some cannot. This
Margaret A. Abernethy, Faculty of Business study examines whether managers’ career preferences
and Economics, Department of Accounting,
The University of Melbourne, 198 Berkeley influence manager-employee value misalignment and
Street, Carlton, VIC 3053, Australia. weaken corporate culture. Career preferences for job-
Email: m.abernethy@unimelb.edu.au hopping provide incentives for managers to signal their
leadership quality in the labor market. We capture
managers’ and employees’ attention allocation across dif-
ferent cultural values using data from conference calls and
Glassdoor. We predict and find that job-hopping man-
agers direct their attention away from soft cultural values
(e.g., respect and integrity) that are less observable by
the external labor market. Furthermore, job-hopping man-
agers who pay insufficient attention to soft cultural values
fail to address the concerns that employees have in their
everyday work, resulting in lower overall employee culture
ratings. Our study highlights the significance of managers’
career preferences in shaping different cultural values and
offers implications for firms selecting senior managers.
KEYWORDS
career preference, corporate culture, manager-employee misalignment,
organization control
Les préférences professionnelles des cadres et la

culture d’entreprise
Résumé
La création d’une culture d’entreprise solide représente un
défi, car elle implique que les cadres dirigeants intègrent
des valeurs partagées au sein de l’entreprise. Néanmoins,
certaines entreprises la rendent possible, mais pas toutes.
Cette étude examine si les préférences professionnelles des
cadres influent sur le désalignement des valeurs des cadres
Accepted by Clara Xiaoling Chen.
© 2024 Canadian Academic Accounting Association.
Contemp Account Res. 2024;1–34. wileyonlinelibrary.com/journal/care 1

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2 CONTEMPORARY ACCOUNTING RESEARCH
et des employés, compromettant ainsi le développement de

la culture d’entreprise. Les préférences professionnelles
liées au changement fréquent d’emploi incitent les cadres à
affirmer leur leadership sur le marché du travail. Les
auteures déterminent la répartition de l’attention des
cadres et des employés, portée sur différentes valeurs
culturelles, à l’aide de données provenant de conférences
téléphoniques et de Glassdoor. Elles formulent et con-
firment que les cadres changeant fréquemment d’emploi
tiennent moins compte des valeurs culturelles intangibles
(comme le respect et l’intégrité), moins visibles sur le mar-
ché du travail externe. En outre, ces cadres ne répondent
pas aux préoccupations des employés dans l’exercice de
leurs fonctions au quotidien, entrainant une baisse des
résultats d’évaluation globale de la culture d’entreprise.
Cette étude met en lumière l’importance des préférences
professionnelles des cadres dans la création des différentes
valeurs culturelles et offre des pistes pour les entreprises
dans le choix de leurs cadres dirigeants.
MOTS-CLÉS
contrôle de l’organisation, culture d’entreprise, désalignement cadre-
employé, préférence professionnelle
1 | INTRODUCTION
Culture represents the “set of desirable norms and values that are widely shared and strongly
held throughout the organization” (O’Reilly & Chatman, 1996). Culture is considered a critical
element of a firm’s management control system. However, embedding shared values in the firm
is challenging. We focus on the potential misalignment between the values espoused by man-
agers (i.e., top executives) and those of employees.1 We study why misalignment occurs by
assessing differences in the implicit incentives of managers to create shared values and the con-
sequences of this misalignment.2
Corporate culture is a valuable intangible asset which is multidimensional rather than unidi-
mensional. Guiso et al. (2015) show that S&P 500 companies advertise different cultural values
on their websites. The top five common cultural values across firms are innovation, teamwork,
respect, integrity, and quality, but managers pay more attention to some values than others.
Effective corporate culture requires managers to identify the cultural values that are important
and encourage employees to embed the chosen values into their day-to-day practices. However,
the cultural values considered important by managers may not correspond to those of
employees. An example of manager-employee misalignment is when employees are concerned
about “integrity” or “respect,” but managers focus on “innovation.” Such manager-employee
value misalignment is unlikely to build an effective culture because what employees value does
not receive sufficient managerial attention.
While managers represent a critical input into corporate culture (Dessein & Prat, 2022), it is
difficult for a firm to create explicit incentives to encourage managers to create an effective
1
We use the term “managers” to refer to the senior executives in the top management team.
2
We recognize that some researchers make a distinction between values and norms. Our study does not make an explicit distinction. We
focus on the misalignment in cultural values of managers and employees within a firm and provide additional empirical evidence
regarding whether managers follow through on what they say.
CAREER PREFERENCES AND CORPORATE CULTURE 3
corporate culture, as the outputs of cultural values cannot be easily measured. We focus on the
role of implicit incentives in determining how managers allocate their attention across different
cultural values. We assess the influence of managers’ career preferences on their alignment with
employees on cultural values and examine whether managers’ career preferences result in less
effective corporate culture when value misalignment occurs.
Career preferences of managers can differ. Some managers prefer to stay in the current firm
and seek internal promotion; others consider outside opportunities as a vital career path for
advancement. Prior studies highlight the “hobo syndrome”—the tendency for employees to
engage in job-hopping—and the studies empirically show that an individual’s pattern of job-
switching is persistent over time (Judge & Watanabe, 1995). Managers with different levels of
job-hopping preferences likely exhibit different concerns about outside opportunities. Accord-
ingly, managers who are prone to job-hopping (job-hopping managers) care more about their
desirability as a potential corporate leader in the executive labor market than managers who
are inclined to seek internal promotion (labeled “settling-in” managers).3
While the executive labor market values managers’ ability to build culture, it does not have
perfect information to evaluate their culture-building ability. Some cultural values are easily
observable to outsiders as objective information is available while some values are less observ-
able. Investments in cultural values that are less observable (e.g., respect and integrity) in the
labor market do not signal managers’ leadership as much as more observable cultural values
(e.g., innovation). Managers’ job-hopping preferences have the potential to increase the mis-
alignment between managers and employees with respect to the importance of different cultural
values. Job-hopping managers who are concerned about their outside job opportunities likely
focus more on the more observable cultural values and pay less attention to the less observable,
soft cultural values than settling-in managers. However, the soft cultural values are what
employees experience in their day-to-day routine and represent what employees are most con-
cerned about (Guiso et al., 2015). The insufficient attention to soft cultural values by managers
will adversely affect the building of shared values with employees and result in less effective cor-
porate culture as perceived by employees.
We use managers’ conversations about cultural values in conference calls to measure the
importance managers place on cultural values.4 It is reasonable to assume that the share of
managers’ conversations about a certain topic in earnings conference calls captures the amount
of managerial attention given to the topic, and thus reflects the topic’s importance as given by
managers (Bae et al., 2023). We also collect company reviews and culture ratings from
Glassdoor to capture employees’ assessment of corporate culture. We follow the methodology
developed by Li et al. (2021) to classify both managers’ discussions and employees’ written
comments into five common cultural values (i.e., innovation, teamwork, respect, integrity, and
quality) first documented by Guiso et al. (2015).
Prior literature has demonstrated that individuals’ job-hopping preferences persist over time,
and their prior employment history will predict their future employment decisions (Judge &
Watanabe, 1995). In a similar spirit, we measure a manager’s job-hopping preference as the
average tenure of their past jobs using the employment history data from BoardEx. In our vali-
dation test, we indeed find that a manager’s past job tenure is predictive of their job-hopping
likelihood. Since our study examines corporate culture (a firm-level construct) which is shaped
collectively by individuals of the top management team (TMT), we take the average of all top
3
The binary classification between job-hopping and settling-in managers is for expositional purposes. Individuals are likely to exhibit
different degrees of propensity to switch jobs. Accordingly, we use a continuous variable in our analyses and do not impose a cut-off
point to empirically classify job-hopping versus settling-in managers.
4
Li et al. (2021) show that the culture measures, while based on managers’ talks in conference calls, are correlated with pertinent
business outcomes. The evidence suggests that managers’ actions are consistent with their talk in the conference calls. Our study builds
on the construct validity documented by Li et al. (2021).
executives’ job-hopping preferences to proxy for the firm-level managers’ career preferences
and perform empirical tests at the firm level.
We predict that compared with settling-in managers, job-hopping managers pay greater
attention to more observable cultural values and less attention to less observable cultural
values. Compared with settling-in managers, job-hopping managers who exhibit such distorted
attention allocation are associated with less effective corporate culture as assessed by
employees. The observability of a given cultural value is jointly determined by the availability
of information and the quality of information to assess the culture-building ability. We consider
integrity, respect, teamwork, and quality to be relatively less observable values and treat inno-
vation as the more observable value. Compared with innovation, the cultural values of integ-
rity, respect, teamwork, and quality have less objective information to mitigate outsiders’
information uncertainty about candidates’ culture-building ability.5 Empirically, our principal
component analysis (PCA) provides validity for the binary classification between innovation
and the other four cultural values. We also present analyses that do not impose any binary clas-
sification but use a categorical variable comprised of five cultural values.
Our results are consistent with our hypotheses, suggesting that managers’ job-hopping pref-
erences direct their attention away from soft cultural values that are important to employees
and result in less effective corporate culture as perceived by the employees. To substantiate the
notion of attention distortion, we also document that managers’ attention to innovation relative
to that of employees is more pronounced for job-hopping managers than for settling-in man-
agers. We do not find that managers’ attention to other soft cultural values (relative to
employees’) differ with managers’ job-hopping preferences. This evidence supports the idea that
managers’ job-hopping preferences increase the value misalignment between the managers and
employees. Our additional analysis further shows that the less effective corporate culture associ-
ated with job-hopping managers is mediated by the manager-employee value misalignment.
We recognize that a less effective corporate culture as perceived by employees can also be
attributed to managers not following through on what they say is important (i.e., the managers
do not “walk the talk”). While the evidence documented in Li et al. (2021) does not support this
concern, we also do not find supporting evidence for this alternative explanation. Specifically, we
find that employees’ overall culture ratings are more sensitive to their assessment of respect and
integrity than their assessment of innovation, and that managers’ job-hopping preferences are
positively associated with employees’ negative comments on respect and integrity. This evidence
suggests that managers’ actions likely reflect their words in that they pay less attention to soft cul-
tural values and indeed receive more criticisms about soft cultural values from the employees. In
addition, we also find that managers’ job-hopping preferences are associated with poor workplace
practices (e.g., providing a healthy and safe workplace, maintaining diversity, providing equal
opportunities, etc.), which are proxies for managers’ actions. Taken together, our evidence sug-
gests that the lower employee culture ratings associated with job-hopping managers are more
likely to be driven by insufficient managerial attention to soft, less observable cultural values.
Soft cultural values are fundamental elements of an organization’s control system
(O’Reilly & Chatman, 1996), because they regulate how things are done within the firm and are
the foundation for embedding codes of conduct in day-to-day practices. Insufficient attention
given to soft cultural values is likely to give rise to control problems. We examine one salient
issue in the control system, namely, financial misreporting risk.6 We find that job-hopping
5
What distinguishes between more observable and less observable cultural values is not the mere presence of objective and verifiable
information. Information will be less available when it is costly to collect, process, and aggregate information. In addition, the available
information may be too noisy to infer managers’ contribution to culture building. Taken together, a cultural value is more observable
when the amount of available information is sufficient to differentiate the unobserved leadership quality among candidates in the labor
market.
6
Our study focuses on the financial misreporting risk of managers’ job-hopping preferences because this issue could be salient in firms
where soft cultural values receive insufficient managerial attention. We do not make any conclusion on the effect of job-hopping
preferences on firm value, as prior literature shows that both innovation and soft cultural values could increase firm value.
managers have higher financial misreporting risk using the measure (F-score) developed by
Dechow et al. (2011). This effect is mediated by less effective culture as measured by employees’
culture ratings.
We make several contributions to the literature. First, we address a puzzle as to why some
firms are able to build effective cultures and others cannot. Top executives often have a clear
mandate to build an effective culture and yet there are numerous examples of failure to do
so. Our empirical evidence shows that job-hopping managers pay insufficient attention to soft,
less observable cultural values and receive lower culture ratings as assessed by employees
(i.e., less effective culture). Our study sheds light on this puzzle by highlighting that managers’
job-hopping preferences will direct managerial attention away from the cultural values that are
of critical importance to employees and thus result in less effective corporate culture. Specifi-
cally, we document that job-hopping managers do not respond to what employees value and
fail to engage employees in creating shared values.
Our study differs from myopic behaviors associated with horizon problems documented by
Dechow and Sloan (1991). Job-hopping managers have incentives to maximize their outside
opportunities, but managers close to retirement are less concerned about outside opportunities.
Given the incentive, job-hopping managers pay less attention to soft cultural value, but they
pay more attention to innovation which also takes time to generate financial returns. Our pre-
dictions and findings on job-hopping preferences do not correspond to managerial myopia.
Second, we provide empirical evidence on not only managers’ attention allocation to cul-
tural values but also employees’ attention to them. While the effectiveness of corporate cultures
depends on shared values, few studies examine whether the importance managers place on dif-
ferent cultural values is consistent with the importance of culture values assessed by employees.
Indeed, Guiso et al. (2015) show that while firms promote different cultural values on their
website, employees are concerned with “integrity.” Our study analyzes textual data of
Glassdoor reviews to measure employees’ attention to different cultural values. By doing so, we
incorporate the two parties’ perspectives and document the potential misalignment in the
importance of different cultural values of managers and employees.
Finally, we add to the culture framework proposed by Graham et al. (2022) by incorporat-
ing the multidimensional feature of corporate culture (as opposed to a unidimensional culture).
This feature enables consideration of an additional agency problem—that is, attention
misallocation—which has not been considered in a framework that treats corporate culture as
unidimensional. Graham et al. (2022) show that leadership’s insufficient attention to corporate
culture is one of the primary factors preventing an effective corporate culture. Our study docu-
ments that insufficient investment in the soft, less observable cultural values is particularly
salient for job-hopping managers.
2 | PRIOR LITERATURE AND HYPOTHESES DEVELOPMENT

Corporate culture is a topic that receives much interest from scholars in management, sociol-
ogy, and economics, and growing interest from accounting researchers. The management
accounting literature characterizes corporate culture as a form of social control in organiza-
tions. Social control works when there is a common set of values within a firm; it is a self-
regulating mechanism, as individuals within the firm care about the people around them and
will conform to the accepted values of the group (Guiso et al., 2015; O’Reilly, 1989). In this
respect, culture complements more traditional control mechanisms, such as incentive contracts.
The Graham et al. (2022) survey of corporate executives in North America provides helpful
advice on how to define, measure, and assess corporate culture in the workplace. It provides
descriptive evidence of the factors that prevent corporate culture from being effective in practice
(e.g., impatient investors). We complement this field work by empirically examining the
determinants of variation in corporate cultures across firms. Dessein and Prat (2022) develop a
theoretical framework that reconciles the different approaches used to explain persistent perfor-
mance differences across firms.7 They characterize corporate culture as one type of organiza-
tional capital, which is defined as a class of firm-specific intangible assets that affect firm
performance but are not perfectly observable.8 In particular, they highlight managers as the
critical inputs in determining the level of organizational capital and point out that agency prob-
lems could arise in building culture because it is not perfectly observable.
Employees also significantly contribute to the effectiveness of culture by living up to the cul-
tural values of the firm in their day-to-day practices. Employees’ assessment of managers’ integ-
rity is value relevant as demonstrated in the Guiso et al. (2015) study. While managers are the
ones who are most responsible for shaping corporate culture at their firms, it is employees’ per-
ception of culture that will determine how things are done in the workplace. Guiso et al. (2015)
highlight that the cultural values managers consider important may not correspond to the
values that employees consider important. For example, managers of the firm may promote an
innovative culture, which does not correspond to employees’ primary concern about a culture
of respect. Such manager-employee misalignment in the relative importance of different cultural
values is detrimental to building shared values.
While culture-building ability is a highly valued attribute in the executive labor market
(Groysberg et al., 2018), it is not perfectly observable to outsiders. Recent work has shown that
managers use corporate public events to provide valuable information for outsiders to assess
their management quality (Whittington et al., 2016).9 For example, Bochkay et al. (2018) ana-
lyze newly hired CEOs and show that these CEOs provide more forward-looking and optimistic
information to the market about their management ability. This finding suggests that managers’
talk is not “cheap talk” but is valuable information to reduce outsiders’ information frictions
about their management quality.10
We predict that managers’ career preferences will determine misalignment in cultural values.
While all managers are concerned about their careers, they do not have the same career prefer-
ences. Some managers are prone to moving around to different firms (job-hopping managers)
while others prefer to stay in the same firm for years (settling-in managers). Indeed, Ghiselli
(1974) observed that some individuals are compelled to pack up and move to another place and
another job after being in one place for a matter of months, or perhaps a year or so. The ten-
dency for workers to engage in job-hopping behavior is termed the “hobo syndrome.”11 This
behavior is observed across all types of people, from those engaged in jobs that require little
training or skill to those in substantive managerial positions (Veiga, 1981). Judge and
Watanabe (1995) document empirical evidence consistent with Ghiselli’s (1974) observation
that past resignations reflect inherent dispositional characteristics (e.g., traits, preferences) that
signal future occurrences of job changes. This line of literature suggests that individuals exhibit
different propensities for job movement, which are in part driven by their personal preferences
in addition to contextual factors—for example, promotion opportunities.
7
The three perspectives are the contingency theory (CT), organization-centric empirical approach (OC), and leader-centric empirical
approach (LC).
8
Other examples include relational contracts (Gibbons & Henderson, 2012) and firm-specific human capital.
9
Managers’ providing information to influence outsiders’ assessment of their management quality can be viewed as a case of “impression
management.” However, managers’ talk for impression management could be either “cheap talk” or credible. The information has to be
credible for impression management to be effective. We refrain from using the term “impression management” to avoid ambiguity.
10
The participants at the corporate public events include financial analysts, investors, and media. While those participants do not
directly make hiring or firing decisions, their views affect managers’ career prospects. For example, Park et al. (2021) show that equity
analysts will influence the interpretation of CEOs’ effect on corporate outcomes and thus affect CEOs’ careers (e.g., dismissal).
11
We do not characterize “hobo syndrome” in terms of the level of job-switching frequency because the definition of frequent job movers
observed in other settings will differ from that in our setting. Drawing on the insight of the literature on “hobo syndrome,” we study
variation in managers’ job-hopping preferences that predict their job-hopping likelihood. We do not attempt to establish a one-to-one
association between “hobo syndrome” and our empirical measure.
Different career preferences are likely to affect how managers distribute their attention
across different cultural values. Agency theory suggests that when agents are rewarded based
on multiple performance measures of different properties (e.g., sensitivity and precision), agents
may opportunistically maximize their financial payoff by focusing on sensitive/precise measures
but overlook the insensitive/noisy measures (Holmstrom & Milgrom, 1991). Such effort alloca-
tion is distorted and not in line with the best interest of the firm, which requires “balanced
efforts” (Datar et al., 2001; Hung et al., 2023). Managers with greater job-hopping preferences
will allocate their attention to maximize their outside job opportunities. However, external
labor markets exhibit substantial information asymmetries, and employers have limited infor-
mation about applicants and are uncertain about their quality (Stigler, 1962). To compensate
for such information uncertainty, future employers will look for candidates who have strong
observable indicators of ability. In contrast, information frictions are less significant within
firms because insiders (e.g., board of directors) have more information about managers’ quality.
Bidwell (2011) examines the differences between external hires and internal movers and finds
that external hires often have stronger observable indicators of ability than internal movers. Job-
hopping managers and settling-in managers have different incentives for providing observable
signals to reduce information frictions about their quality.
Not all cultural values have the same power to signal managers’ leadership quality to the
outside labor market. Some cultural values are more observable than others by outsiders. In
response to the information demand in the external labor market, job-hopping managers will
focus on the cultural values that are more observable to outsiders rather than the cultural values
that are important but less observable to outsiders. In comparison, settling-in managers, who
prefer to stay in their current firms, are less concerned about the information frictions in the
external labor market; their need to supply observable signals to insiders is not as strong as job-
hopping managers’ need to signal to outsiders. Therefore, settling-in managers are less likely to
distort their attention to different cultural values than job-hopping managers. We state our first
hypothesis as follows:
Hypothesis 1 (H1). Job-hopping managers place greater importance on more

observable cultural values but less importance on less observable cultural values
than settling-in managers.
Managers’ lack of sufficient incentives to invest in corporate culture has been identified as
an important source of ineffective corporate culture (Dessein & Prat, 2022). However, this pre-
diction does not apply equally to different cultural values. Job-hopping managers are likely to have
incentives to invest in more observable cultural values, but they lack incentives to invest in less
observable cultural values. While managers are primarily responsible for shaping the corporate cul-
ture at their firms, whether employees share the same values and embed the values into their day-
to-day routines is what determines the effectiveness of corporate culture. When employees agree
with the importance of more observable cultural values that are important to job-hopping man-
agers, job-hopping managers are likely to build shared values and develop effective corporate cul-
ture. However, when employees are more concerned about less observable values than more
observable values, manager-employee misalignment in the importance of cultural values will occur
in firms with job-hopping managers; this will be associated with corporate culture.
Guiso et al. (2015) document that regardless of the cultural values promoted on the company
website, employees’ assessment of managers’ integrity influences firm performance. The study not
only demonstrates the significance of employees in determining the effectiveness of corporate cul-
ture, but also suggests that employees place greater importance on the soft cultural values
(e.g., integrity) that they experience in their everyday work life but are less observable to outsiders.
When job-hopping managers place higher importance on the more observable values and overlook
the less observable values, employees’ primary concern does not receive sufficient attention from
the managers. The consequence of this manager-employees value misalignment is the inability to
build an effective culture based on shared values. As discussed in H1, the distribution of attention
of settling-in managers is less likely to be biased and they are more likely to pay sufficient attention
to soft, less observable values that correspond to employees’ concerns. As a result, we expect that
managers’ value misalignment with employees will be greater for job-hopping managers than
settling-in managers, and predict that job-hopping managers are more likely than settling-in man-
agers to be associated with less effective corporate culture as assessed by employees.
Hypothesis 2 (H2). Job-hopping managers are associated with less effective corpo-
rate culture than settling-in managers.
3 | RESEARCH DESIGN
3.1 | Sample and data

We use the five cultural values developed in Li et al. (2021) to measure managers’ attention to differ-
ent cultural values. Our sample covers the period from 2002 to 2017.12 We rely on 56,234 records of
individual executives’ employment history from the BoardEx database to measure managers’ career
preferences. We aggregate the individual executives’ career preferences into firm-level measures of
career preferences (10,932 firm-year observations). We obtain financial information from the Com-
pustat database and long-term financial incentives of the top executives from the ExecuComp data-
base. We retain 9,348 firm-year observations after merging different datasets. After further removing
1,884 observations from the financial industry and 920 observations with missing values of variables
used in our main regressions, our final sample consists of 6,544 firm-year observations. This sample
is used to test H1. Sample distributions by year and industry are presented in Table 1.
To test H2, we rely on Glassdoor.com, a workplace rating website, to measure employees’
assessment of culture. We manually extract 1,048,516 employees’ reviews on corporate culture
from Glassdoor, including culture ratings and their comments on corporate culture. The com-
ments include employees’ opinions on the pros and cons of corporate culture as well as their
advice to management.13 The sample period spans from 2008 to 2017 because Glassdoor started
providing data from 2008. We aggregate individual employees’ reviews to construct firm-level
measures of employees’ assessment of culture. This gives us 3,304 firm-year observations for
testing H2 after deleting observations with missing variables.
3.2 | Measure of job-hopping career preferences
Prior psychology and management literature provides supporting evidence that individuals’
past employment history predicts their likelihood of engaging in future job-hopping behavior
(Ghiselli, 1974; Judge & Watanabe, 1995). Accordingly, we consider an executive to have a
relatively strong job-hopping preference if they have a history of frequently switching firms and
12
The culture data from Li et al. (2021) spans from 2001 to 2018. Given there are only 143 observations in the year 2001, we remove this
year from our main analysis. Our sample ends in 2017 because we need 1-year leading culture data in our main analysis. Our empirical
analyses include year fixed effects to control the potential effects of regulatory changes (e.g., compensation disclosure requirements in
2006). Our inferences are not changed when we retain the observations from the year 2001 or when we only use the sample period
spanning from 2006 to 2017.
13
Our measure is based on reviews provided by both full-time and part-time employees. Since part-time employees are less subject to the
influence of managers’ attention to less observable cultural values, the inclusion of part-time employees’ ratings likely adds noise to our
measures that results in empirical findings against our prediction. In addition, firms may attempt to improve their Glassdoor ratings by
encouraging employees to provide high ratings on the website (Winkler & Fuller, 2019) and job-hopping managers likely have stronger
incentives to do so than settling-in managers. This bias likely leads to empirical results against our prediction.
TABLE 1 Sample distribution.

Panel A: Year distribution
Year Freq.
2002 362
2003 416
2004 446
2005 474
2006 480
2007 532
2008 566
2009 567
2010 386
2011 302
2012 302
2013 310
2014 324
2015 335
2016 377
2017 365
Total 6,544
Panel B: Industry distribution
Fama-French 12 industries Freq.
Consumer non-durables 534

Consumer durables 226
Manufacturing 981
Oil, gas, and coal extraction and product 448
Chemicals and allied products 336
Business equipment 1,451
Telephone and television transmission 139
Wholesale, retail, and some services 912
Healthcare, medical equipment, and drugs 612
Other 905
Total 6,544
staying in a firm for a short period of time. We infer a top executive’s career preference from
their employment history in the BoardEx database which provides biographical information on
directors and top earners (e.g., senior executives) of publicly traded US companies (Fracassi &
Tate, 2012). For an executive-firm pair in our sample, we calculate the individual executive’s
average tenure in their past employment before they joined the firm with which they are
currently affiliated (iPastTenure).14 A lower value of iPastTenure indicates that the executive
14
The biographic data of managers allow us to trace their employment history back to their early career (e.g., the first job after they
graduated from college) before being a senior executive whose compensation is publicly available. Importantly, the mean of the career
length in our sample is 20.9 years. Only 10% of the executives have less than 10 years in their past career length. The career length in our
dataset is sufficiently long to infer their career preferences.
did not stay long in an organization in the past and thus likely has a greater job-hopping prefer-
ence. Since iPastTenure was formed before the executives joined their current firms, it measures
the executives’ ex ante career preferences which is less subject to the influence of their current
firms’ characteristics.15
Corporate culture-building relies on collective efforts from all executives in the TMT, in
which each executive delivers the same message and behaves in a coherent fashion
(Hambrick & Mason, 1984). For this reason, we aggregate the executives’ iPastTenure to the
firm-level by averaging the iPastTenure of all top executives in the TMT (TMTPastTenure). To
ease interpretation, we multiple TMTPastTenure by 1 to construct our main variable of inter-
est TMTCareer. A higher value of TMTCareer indicates a greater preference for job-hopping.
3.3 | Measures of managers’ attention to cultural values
We use the measures of five cultural values from Li et al. (2021) to proxy for managers’ atten-
tion to different cultural values, which we label Mgt_Innovation, Mgt_Integrity,
Mgt_Teamwork, Mgt_Respect, and Mgt_Quality.16 A higher score on a cultural value indicates
that this cultural value is mentioned more often by the top executives in conference calls and
therefore suggests that it is given more importance by the top executives. Among the five cul-
tural values, the values of integrity, respect, teamwork, and quality are less observable to the
outsiders than the value of innovation. The amount of information to assess the firm’s innova-
tion includes R&D expenditure (the inputs) and the patents (the outputs). Outsiders are also
able to differentiate between innovation via in-house R&D activities or via acquisitions of other
small innovative firms. However, objective information is generally limited for outsiders to
assess “respect” or “integrity” values within firms. While firms might have objective (verifiable)
information to evaluate some soft cultural values, such as integrity and quality, it is often lim-
ited to negative signals (e.g., financial misstatement or product recalls) and does not reflect
varying levels of managers’ investments in soft cultural values. In other words, the verifiable
information relating to integrity, respect, teamwork, and quality is helpful for outsiders to dif-
ferentiate managers who perform very poorly in the soft values, but it is less helpful for out-
siders to identify managers who have demonstrated leadership in developing the soft cultural
values.17
We develop two variables to examine managers’ distorted attention allocation
(i.e., insufficient attention to the less observable values relative to the more observable value).
Specifically, we create an indicator variable (Mgt_SoftCul) to identify firms whose top execu-
tives pay the most amount of attention to any of the less observable cultural values—that is,
Mgt_SoftCul equals one if one of the less observable cultural values has the highest score
among the five cultural values, and zero otherwise. In addition, we measure firms’ degree of
managerial attention distortion (Mgt_DiffCul) by calculating the difference between the score
of innovation and the average score of the other four cultural values.
15
As a validation test (presented in Appendix 1), we examine the association between a given executive’s job-hopping likelihood (i.e., the
likelihood of exiting the current firm and joining another firm) and their past job tenure (iPastTenure). We find that an executive’s past
job tenure (i.e., the inverse of job-hopping preference) is associated with a lower job-hopping likelihood. This supports the prediction
that a shorter past tenure reflects an executive’s preference to pursue external career options.
16
Li et al. (2021) use the seed words of each cultural value outlined by Guiso et al. (2015) and employ the word embedding model to
learn the meaning of words based on contexts. Their methodology can discern words with similar meanings and thus generate a more
comprehensive dictionary of cultural values.
17
To validate our classification of different cultural values, we perform a PCA of the five cultural values. The results reported in
Appendix 2 show that integrity, teamwork, respect, and quality all load positively on the first component, but innovation loads
negatively and has the largest magnitude. These results provide supporting evidence for us to group integrity, teamwork, respect, and
quality as soft, less observable values and to treat innovation as a separate more observable value.
3.4 | Measures of employees’ assessment of cultural values
Our measures of employees’ views on corporate culture focus on two aspects: their perceived
importance of different cultural values and their overall assessment of corporate culture. In line
with the culture measures developed by Li et al. (2021), we rely on employees’ comments on cul-
ture posted on Glassdoor to gauge their perspectives on the relative importance of different
cultural values. Specifically, using the keyword list of each cultural value from Li et al. (2021),
we count the number of culture-related words in each employee’s review for each cultural value
and scale it by the total words in the employee’s review. We use it as a proxy for the importance
that an employee places on each cultural value. Similar to Li et al. (2021), the rationale is that if
the keywords related to a cultural value are mentioned by an employee more frequently in their
review, this cultural value is considered more important by the employee. We take the average
frequency of culture-related words of all employee reviews to form the firm-level measure of the
employees’ perceived importance of the cultural value. We create an indicator variable
Emp_SoftCul that equals one for firms if any of the less observable cultural value has the
highest score among the five employee-based cultural values, and zero otherwise.
We further construct a measure for the manager-employee value misalignment, a composite
variable that is based on managers’ attention to different cultural values and the associated
importance perceived by employees. Specifically, we consider manager-employee misalignment
occurs (Mgt_Emp_Misalign = 1) when the TMT emphasizes the more observable cultural value
(i.e., Mgt_SoftCul = 0), while employees perceive the soft cultural values as the most important
(i.e., Emp_SoftCul = 1).
We rely on employees’ culture ratings on Glassdoor to measure their overall evaluation of
the effectiveness of corporate culture. On Glassdoor, employees do not rate any specific cultural
values but assess the overall corporate culture on a five-point scale. The value of culture ratings
ranges from one to five, and a higher value of the culture rating indicates a more positive per-
ception of culture by the individual employee. We construct three firm-level proxies for
employees’ overall assessment of culture. The first one is the level of culture ratings
(Emp_CultureRating), measured as the average culture rating across employees for a given
firm-year. In our sample, the mean value of Emp_CultureRating is 3.14. We further categorize
each individual culture rating as a positive rating if it is higher than three, a neutral rating if it
equals three, and a negative rating if it is lower than three. We calculate the percentage of posi-
tive ratings to form a measure that reflects the extent of employees’ positive perception of cul-
ture (Emp_PositiveRating) and the percentage of negative ratings to indicate the extent of
employees’ negative perception of culture (Emp_NegativeRating).
3.5 | Descriptive statistics

We present summary statistics of the variables in Table 2. The mean of Mgt_SoftCul is 0.328,
suggesting that less observable cultural values are given the most amount of attention from
managers in only 32.8% of the firm-years. This is consistent with prior findings that the more
observable cultural value, that is, innovation, is often the most advertised one by firms (Guiso
et al., 2015). In contrast, the employees’ perceived importance of cultural values
(i.e., Emp_SoftCul) has a mean of 0.802. This suggests that employees often place greater
emphasis on less observable cultural values.18 The mean value of Mgt_Emp_Misalign suggests
18
As shown in Table 2, among the five employee-based cultural value measures, Emp_Respect has the highest mean, suggesting that
respect is mentioned by employees most frequently in their reviews. In addition to the descriptive evidence, we also conduct formal
analyses to examine the relative importance of the five cultural values in determining the employees’ overall cultural ratings. Appendix 3
presents the details of this analysis. The results suggest that employees are more concerned about the values of respect and integrity than
innovation.
TABLE 2 Summary statistics.

Variable N Mean SD Median p10 p90
Independent variable and culture variables

TMTCareer 6,544 7.933 4.288 6.773 13.967 3.756
Mgt_Innovation 6,544 2.098 1.338 1.743 0.854 3.772
Mgt_Integrity 6,544 0.499 0.332 0.428 0.157 0.923
Mgt_Teamwork 6,544 0.697 0.490 0.574 0.237 1.281
Mgt_Respect 6,544 0.903 0.733 0.708 0.288 1.719
Mgt_Quality 6,544 1.392 0.770 1.221 0.619 2.374
Mgt_SoftCul 6,544 0.328 0.470 0.000 0.000 1.000
Emp_Innovation 3,304 0.012 0.013 0.010 0.000 0.027
Emp_Integrity 3,304 0.007 0.008 0.006 0.000 0.014
Emp_Teamwork 3,304 0.003 0.004 0.002 0.000 0.006
Emp_Respect 3,304 0.073 0.026 0.072 0.046 0.097
Emp_Quality 3,304 0.011 0.011 0.009 0.000 0.022
Emp_SoftCul 3,304 0.802 0.399 1.000 0.000 1.000
Mgt_Emp_Misalign 3,304 0.590 0.492 1.000 0.000 1.000
Emp_CultureRating 3,304 3.174 0.532 3.186 2.520 3.817
Emp_PositiveRating 3,304 0.424 0.178 0.425 0.214 0.630
Emp_NegativeRating 3,304 0.375 0.171 0.359 0.197 0.571
Control variables
ExConnect 6,544 23.093 17.795 18.800 4.500 47.400
InConnect 6,544 0.267 0.535 0.000 0.000 0.800
LogAT 6,544 8.579 1.550 8.602 6.520 10.504
Seg 6,544 2.852 2.437 3.000 0.000 6.000
Lev 6,544 0.204 0.155 0.193 0.000 0.405
Growth 6,544 0.079 0.185 0.067 0.111 0.287
MTB 6,544 3.436 4.168 2.516 1.029 6.795
Return 6,544 0.103 0.403 0.072 0.359 0.550
ROA 6,544 0.061 0.076 0.064 0.007 0.142
Loss 6,544 0.113 0.317 0.000 0.000 1.000
TMTIncentive 6,544 0.953 1.086 0.650 0.088 2.023
TMTAbility 6,544 0.041 0.176 0.011 0.124 0.307
CEOFemale 6,544 0.027 0.162 0.000 0.000 0.000
CEOChange 6,544 0.112 0.315 0.000 0.000 1.000
TMTFemale 6,544 0.079 0.123 0.000 0.000 0.200
TMTAge 6,544 53.761 4.570 53.667 48.167 59.400
TMTSize 6,544 5.757 1.014 6.000 5.000 7.000
NumEmp 6,544 9.576 1.505 9.525 7.647 11.539
TMTExperience 6,544 6.473 2.669 6.200 3.400 9.800
InternalHire 6,544 0.880 0.197 1.000 0.500 1.000
that in 59% of our sample firms, managers emphasize innovation whereas employees consider
soft culture values as the most important. Furthermore, TMTCareer (which is the inverse of the
average tenure of a firm’s top executives in their past employment) has a mean value of 7.933,
meaning that top executives in our sample firms stay about 8 years in an organization in their
past employment.19
Untabulated correlations show that TMTCareer has a significant negative correlation with
managers’ tendency to emphasize less observable cultural values (Mgt_SoftCul) (cor-
relation = 0.087, p < 0.01). While TMTCareer does not have a significant correlation with
Emp_SoftCul (correlation = 0.002), it is positively correlated with manager-employee value
misalignment (Mgt_Emp_Misalign) (correlation = 0.058, p < 0.01). TMTCareer also has signif-
icantly negative correlations with employees’ overall culture ratings (Emp_CultureRating) (cor-
relation = 0.037, p < 0.05). Overall, the descriptive statistics and correlations are in line with
our predictions that managers and employees have misalignment in the importance of more
observable versus less observable cultural values and that managers’ job-hopping preferences
could exacerbate the misalignment and lead to less effective corporate culture.
4 | MAIN MODELS AND RESULTS

4.1 | Empirical model
We test the two hypotheses using the following generic specification:
CultureVari,tþ1 ¼ α1 TMTCareeri,t þ Controls þ εi,t , ð1Þ
where i is an index across firms, and t is an index across years. CultureVar denotes the various
culture-related measures.20 TMTCareer is the measure of managers’ job-hopping preferences at
the firm level.
Controls in Equation (1) denote the control variables. Specifically, we control for firm size
(LogAT and NumEmp), operating complexity (Seg), capital structure (Lev), profitability (ROA
and Loss), stock market performance (Return), and growth prospects (MTB and Growth) that likely
influence both managers’ incentives to stay and their attention to different cultural values. More-
over, a TMT’s size and composition could influence communication and cooperation in the man-
agement team, which in turn influence managers’ incentives to stay. We therefore control for
various TMT characteristics including the TMT size (TMTSize), the TMT age (TMTAge), and the
percentage of female executives in the team (TMTFemale). In addition, given that long-term finan-
cial incentives in compensation (such as options and restricted shares that will be forfeited when
managers leave the firm) provide managers with incentives to stay (Balsam & Miharjo, 2007), we
add long-term incentives in compensation (TMTIncentive).21 Culture-building not only depends on
managers’ incentive but also their ability and experience. Accordingly, we control for the managers’
ability by adding the managerial ability scores (TMTAbility) developed by Demerjian et al. (2012),
and the average experience of holding executive positions of the TMT (TMTExperience). Further,
we control for top executives’ external social connections (ExConnect), which likely influence their
19
The individual-level descriptive evidence shows that 69% of top executives have past average tenure less than 8 years. Within the group
of executives, the proportion of job-hopping incidents gradually decreases with their past tenure. The evidence supports the linear
function of job-hopping preferences with managers’ past tenure. In addition, if the job-hopping preferences do not increase with past
tenure for a certain group of executives, the coefficient estimates based on OLS will be attenuated, suggesting that the significant
coefficient we document is unlikely to be driven by the assumed linearity between job-hopping preferences and past tenure.
20
We use one-year leading cultural measures in our main analysis. Arguably, managers’ career preferences could influence their attention
to different cultural values for more than 1 year. In robustness tests, we redo the analyses using 2- or 3-year leading cultural values as the
dependent variables and find that the results are robust to these alternative specifications.
21
Whether the effect of job-hopping preferences will be eliminated by long-term financial incentives is not obvious; prior studies demonstrate
that compensation contracts alone cannot fully address agency problems (Hung et al., 2023; Roberts, 2010). When firms cannot observe
managers’ preferences perfectly, or the cost to encourage managers to stay is too high for the firm to bear, managers’ job-hopping
preferences will continue to influence how they pay attention to different cultural values. In an untabulated additional test, we find that the
attention distortion effect continues to be present but is less pronounced when managers have stronger financial incentives to stay.
social status and capability for job-hopping, and their internal social connections within the execu-
tive team (InConnect), which likely influence the team cohesion and collaboration.22
Additionally, a firm’s hiring and promotion policy could potentially influence executives’
incentives to stay or leave the firm. In particular, for non-CEO top executives, their intention to
stay at a firm is likely to be stronger if the firm normally has CEOs internally promoted than if
the firm hires externally.23 We therefore add an additional control variable InternalHire, which
is calculated as the percentage of CEOs who were internally promoted in the past. Finally,
given the importance of CEOs in leading the TMTs, we control for CEO characteristics, includ-
ing whether the CEO is a female (CEOFemale) as prior studies suggest that female CEOs
behave differently from male CEOs (Adhikari et al., 2019; Huang & Kisgen, 2013), and
whether the firm experienced a change of CEO in the year (CEOChange). In all regressions, we
add year and industry fixed effects. All variables are defined in Appendix 4.
4.2 | Job-hopping preferences and managers’ attention to cultural values (H1)

4.2.1 | Do job-hopping managers direct attention away from less observable
cultural values?
To test H1, which pertains to job-hopping managers directing their attention away from less
observable values, we first use Mgt_SoftCul as the dependent variable in Equation (1). We
expect a negative association between TMTCareer and Mgt_SoftCul when managers’ job-
hopping preferences incentivize them to pay less attention to less observable cultural values.
When using another dependent variable, Mgt_DiffCult, which captures the degree of managers’
distorted attention between more observable and less observable cultural values, we predict a
positive association between TMTCareer and Mgt_DiffCul.
Panel A of Table 3 reports the regression results. Columns 1 and 2 show that the coefficient
of TMTCareer is negative and statistically significant (0.049, p < 0.01) for the analysis of
Mgt_SoftCul and positive and statistically significant for the analysis of Mgt_DiffCul (0.020,
p < 0.05). This is consistent with our prediction that the less observable cultural value is less
likely to be emphasized within a firm when the managers have stronger job-hopping preferences
and that managers’ job-hopping preferences increase attention distortion between more observ-
able and less observable cultural values.
In addition to the dichotomous classification of more observable and less observable cultural
values, we analyze managers’ relative attention to each cultural value. We construct a categorical vari-
able (Mgt_CatCul) which ranges from 1 to 5 to indicate the cases in which each specific cultural value
receives the most amount of managerial attention. We conduct a multinomial logit regression on
Mgt_CatCul, with the baseline category being the case in which innovation receives the largest amount
of managerial attention. In this multinomial logit regression, we test whether managers’ job-hopping
preferences reduce the probability of each less observable cultural value receiving the greatest manage-
rial attention relative to innovation. We expect a negative and significant coefficient on TMTCareer.
22
Following prior studies (Bruynseels & Cardinaels, 2014), we use information on employment and education history from the BoardEx
database to capture individuals’ social connections. If two individuals were associated with the same organization (e.g., a university or a
company) during an overlapping period of time, they are considered “connected.” For a given executive in a given firm, we measure the
focal executive’s external connections as the number of connected S&P 1500 firms whose directors or top executives are connected to the
focal executive before the focal executive joined the current firm. Similarly, we measure the focal executive’s internal connections as the
number of connected top executives within the same firm before the focal executive joined the current firm. To form the firm-level
measures, we aggregate the executives’ external and internal connections to the firm-level, respectively, and create the two connection
variables ExConnect and InConnect.
23
In an additional analysis, we find that the effect of non-CEO executives’ job-hopping preferences on managers’ tendency to direct
attention away from less observable cultural values is less pronounced when firms have a strong policy of internally promoting
executives to the CEO position (i.e., when all past CEOs were internally promoted).
TABLE 3 Managers’ attention to cultural values.

Panel A: Managers’ tendency to direct attention away from less observable cultural values
(3) (4) (5) (6)
(1) (2) Integrity versus Teamwork versus Respect versus Quality versus
Mgt_SoftCul Mgt_DiffCul Innovation Innovation Innovation Innovation
TMTCareer 0.049*** 0.020** 0.051 0.008 0.034* 0.059***

(3.324) (2.733) (0.844) (0.230) (1.658) (3.718)
ExConnect 0.003 0.005*** 0.010 0.011 0.006 0.003
(0.912) (3.531) (0.788) (1.640) (1.218) (0.738)
InConnect 0.022 0.049 0.171 0.158 0.243 0.017
(0.231) (0.888) (0.472) (0.924) (1.636) (0.136)
LogAT 0.367*** 0.128** 0.090 0.140 0.892*** 0.294***
(5.050) (2.648) (0.293) (0.796) (6.296) (3.375)
Seg 0.030 0.002 0.256*** 0.089* 0.083** 0.006
(1.455) (0.194) (3.067) (1.786) (2.096) (0.250)
Lev 0.295 0.183 1.300 1.011 0.342 0.513
(0.734) (0.781) (1.164) (1.217) (0.519) (1.194)
Growth 0.317* 0.171* 0.911 0.158 0.142 0.232
(1.769) (1.778) (1.166) (0.312) (0.303) (1.037)
MTB 0.008 0.017** 0.017 0.011 0.011 0.019
(0.649) (2.929) (0.399) (0.402) (0.752) (1.385)
Return 0.079 0.032 0.135 0.134 0.071 0.109
(1.026) (0.715) (0.404) (0.656) (0.448) (1.163)
ROA 1.020 0.641 2.778 4.319* 0.597 0.582
(1.096) (1.610) (0.988) (1.957) (0.438) (0.633)
Loss 0.084 0.056 0.283 0.048 0.546* 0.101
(0.456) (0.885) (0.374) (0.122) (1.679) (0.594)
TMTIncentive 0.058 0.062** 0.068 0.054 0.033 0.086*
(1.451) (2.351) (0.433) (0.627) (0.431) (1.832)
TMTAbility 0.081 0.306 1.817* 2.404*** 0.300 0.644*
(0.278) (1.365) (1.670) (3.678) (0.466) (1.878)
CEOFemale 0.195 0.026 0.710 16.508*** 0.043 0.473
(0.593) (0.146) (0.682) (33.695) (0.069) (1.312)
CEOChange 0.007 0.019 0.103 0.081 0.004 0.005
(0.099) (0.593) (0.185) (0.259) (0.020) (0.050)
TMTFemale 0.214 0.500** 1.725 0.178 0.757 0.754
(0.568) (2.231) (1.605) (0.172) (1.168) (1.610)
TMTAge 0.023** 0.023*** 0.020 0.049** 0.001 0.018*
(2.515) (3.886) (0.533) (2.307) (0.039) (1.779)
TMTSize 0.012 0.023 0.387** 0.050 0.134** 0.031
(0.278) (1.049) (2.308) (0.560) (2.109) (0.775)
NumEmp 0.208*** 0.093* 0.154 0.465** 0.660*** 0.141*
(3.124) (2.072) (0.480) (2.516) (5.013) (1.702)
TMTExperience 0.007 0.015 0.085 0.027 0.062 0.003
(0.362) (1.450) (1.264) (0.512) (1.567) (0.129)
(Continues)
TABLE 3 (Continued)
Panel A: Managers’ tendency to direct attention away from less observable cultural values
(3) (4) (5) (6)
(1) (2) Integrity versus Teamwork versus Respect versus Quality versus
Mgt_SoftCul Mgt_DiffCul Innovation Innovation Innovation Innovation
InternalHire 0.297 0.097 1.425* 0.073 0.608 0.226

(1.286) (0.656) (1.779) (0.143) (1.408) (0.724)
Year FE Yes Yes Yes Yes Yes Yes
Industry FE Yes Yes Yes Yes Yes Yes
Cluster Firm, year Firm, year Firm Firm Firm Firm
Observations 6,479 6,544 6,544 6,544 6,544 6,544
Panel B: Manager-employee attention misalignment
(1) (2) (3) (4) (5) (6)
Mgt_Emp_ Mgt_Emp_ Mgt_Emp_ Mgt_Emp_ Mgt_Emp_ Mgt_Emp_
Diff_Innovation Diff_Integrity Diff_Teamwork Diff_Respect Diff_Quality Misalign
TMTCareer 0.016* 0.005 0.012 0.009 0.020 0.008**

(1.880) (0.565) (1.577) (1.055) (1.771) (2.275)
Controls Yes Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes Yes
Industry FE Yes Yes Yes Yes Yes Yes
Cluster Firm, year Firm, year Firm, year Firm, year Firm, year Firm, year
Observations 3,304 3,304 3,304 3,304 3,304 3,304
Note: This table presents the regression results for testing H1. Column 1 of Panel A reports the results for analyzing the influence of job-
hopping preferences on managers’ tendency to direct attention away from soft, less observable cultural values. Sample size in this
analysis drops slightly because of perfect predictions associated with industry fixed effects in the logit regression. Column 2 of Panel A
reports the results for analyzing the degree of distortion. Columns 3–6 report the results from the multinomial regression in which
innovation is compared to each of the soft cultural values including integrity, teamwork, respect, and quality. Panel B reports the results
for analyzing manager-employee value misalignment. Columns 1–5 of Panel B present the results for the manager-employee difference
in attention to each cultural value. Column 6 of Panel B reports the results for the analysis of the likelihood of misalignment (i.e., a
situation in which managers emphasize innovation but employees consider soft cultural values as most important). Standard errors are
adjusted for heteroscedasticity and clustered at firm and year levels. Test statistics (i.e., t- or Z-statistics) are reported in parentheses. All
continuous variables are winsorized at the 1st and 99th percentiles. Variable definitions are presented in Appendix 4.
*, **, and *** indicate statistical significance at the 10%, 5%, and 1% levels, respectively, based on two-tailed tests.
Columns 3–6 report the results of the multinomial logit regression. TMTCareer appears to
be negative and significant in two of the four cultural values, that is, respect (0.034, p < 0.10)
and quality (0.059, p < 0.01). The results indicate that managers’ job-hopping preferences are
associated with a significantly lower likelihood of managers giving greater attention to cultural
values of respect or quality relative to innovation. Taken together, the results presented in
Table 3 support our prediction in H1 that managers’ job-hopping preferences are associated
with reduced attention to less observable cultural values.
4.2.2 | Do job-hopping managers benefit from focusing on the more

observable cultural value?
We argue that job-hopping managers allocate greater attention to more observable cultural
values than less observable cultural values and expect that doing so could potentially bring
them career benefits. To support this conjecture, we conduct two additional analyses to examine
the job market consequences of job-hopping managers’ investment in more observable cultural
value (i.e., innovation). The first analysis is an individual-level analysis on whether job-hopping
managers’ likelihood of successful job-switching is significantly greater when they pay the most
amount of attention to innovation than when they do not. We modify our validation test in
Appendix 1 and perform a subsample analysis in which we divide the sample by whether inno-
vation receives the highest score among the five cultural values (Mgt_SoftCul = 0). We find
that the negative association between the average of a manager’s past tenure (iPastTenure) and
the job-switching likelihood (JobHop) is attenuated when managers pay the most amount of
attention to innovation (untabulated). This evidence suggests that investing in innovation
increases the likelihood of successful job-hopping.
The second analysis is a firm-level analysis on attracting social attention. We test whether
job-hopping managers attract greater social attention and whether such effect is more salient
when the job-hopping managers emphasize the more observable cultural value. Greater social
attention increases the managers’ visibility in the labor market and could be beneficial to their
career outlook. Following Green et al. (2019), we use media coverage of the firm to proxy for
the degree of social attention. Media coverage for a firm-year (MediaCoverage) is calculated as
the natural logarithm of the total number of news articles about the firm in a year based on
RavenPack News Analytics. We regress MediaCoverage on TMTCareer and then perform a
subsample analysis in which we segment the sample by whether innovation receives the highest
score among the five cultural values. Untabulated results show that managers’ job-hopping
preferences are associated with greater media coverage and this effect is driven by the group in
which innovation is given the most amount of managerial attention. Collectively, these results
provide support for our argument that job-hopping managers are likely to obtain career bene-
fits from allocating their attention to more observable cultural values.
4.2.3 | Do job-hopping preferences increase the manager-employee value

misalignment?
The analyses of managers’ attention (Panel A of Table 3) suggest that job-hopping preferences
change managers’ attention distribution across more observable and less observable cultural values.
To shed light on whether the change is indeed distorted, we use employees’ attention on different
cultural values as the benchmark (which is unlikely to be biased by managers’ job-hopping prefer-
ences)24 and examine the difference in attention allocation between managers and employees. The
larger the difference in attention, the greater the value misalignment between manager and
employees. Managers’ attention and employees’ attention are from different data sources. Before
calculating the differences in the attention between managers and employees for each cultural value,
we standardize the measures of cultural values from Li et al. (2021) and our employee-based mea-
sures of cultural values from Glassdoor. We label the variables capturing manager-employee differ-
ences in attention to cultural values as Mgt_Emp_Diff_Innovation, Mgt_Emp_Diff_Integrity, and so
forth, and use each of them as the dependent variable in Equation (1).
Panel B of Table 3 reports the regression results on manager-employee differences in their
attention to cultural values. We first present their differences on each cultural value in Columns
1–5. For the attention to innovation shown in Column 1, we find a significant positive associa-
tion between job-hopping preferences (TMTCareer) and the manager-employee attention differ-
ence (Mgt_Emp_Diff_Innovation) (0.016, p < 0.10). For other less observable values, we do not
find job-hopping preferences are significantly associated with manager-employee attention
24
Our untabulated results show no significant associations between managers’ job-hopping preferences and employees’ attention
allocation. That is, when we use Emp_SoftCul or Emp_DiffCul as the dependent variable, we do not find TMTCareer loads significantly
in the regressions.
differences. These results suggest that managers’ job-hopping preferences are associated with a
greater manager-employee attention misalignment, and this misalignment is driven by man-
agers paying more attention to the more observable value—that is, innovation.
One should be careful in interpreting the economic significance of manager-employee atten-
tion difference on each cultural value. For a given numerical value, the amount of attention that
it represents for managers is likely to be different from that for employees. As a more direct
analysis on the value misalignment, we use Mgt_Emp_Misalign as the dependent variable and
test whether managers’ job-hopping preferences increases the likelihood of the misalignment
when innovation receives the greatest amount of managerial attention, but one of the soft cul-
ture values is ranked as the most important cultural value by employees. Column 6 of Panel B
in Table 3 reports the results. We find a significantly positive coefficient on TMTCareer (0.008,
p < 0.05). This evidence further supports the idea that managers’ job-hopping preferences exac-
erbate manager-employee cultural value misalignment.
4.3 | Job-hopping preference and the effectiveness of corporate culture (H2)
4.3.1 | Are job-hopping managers associated with less effective corporate

culture?
The analyses in the previous section suggest that job-hopping preferences direct managers’
attention away from soft, less observable cultural values and create value misalignment between
managers and employees since employees are more concerned about the less observable values.
We predict in H2 that job-hopping managers are associated with weaker corporate culture due
to value misalignment. We measure the effectiveness of corporate cultures using employees’
overall culture ratings obtained from Glassdoor (Emp_CultureRating) and predict a negative
association between job-hopping preferences and the effectiveness of corporate culture.
Panel A of Table 4 reports the results for testing H2. Column 1 uses employees’ overall cul-
ture ratings as the dependent variable and reports a significantly negative coefficient of
TMTCareer (0.009, p < 0.05). When we use alternative measures—the percentage of positive
ratings (Emp_PositiveRating) and the percentage of negative ratings (Emp_NegativeRating)—
Column 2 shows that job-hopping preferences are negatively associated with the proportion of
positive ratings (0.003, p < 0.10), and Column 3 reports that job-hopping preferences are posi-
tively associated with the proportion of negative ratings (0.003, p < 0.05). Collectively, these
results support our prediction in H2 that managers’ job-hopping preferences are associated with
weaker corporate culture as assessed by employees.
To provide further support for H2, we next estimate the mediation effect of manager-
employee value misalignment on the association between job-hopping preferences and
employees’ overall culture ratings. Managers’ job-hopping preferences will influence the effec-
tiveness of corporate culture directly as well as indirectly through manager-employee value mis-
alignment. Following the approach in He et al. (2019), we simultaneously estimate the direct and
indirect effects of job-hopping preferences on the effectiveness of corporate culture. Simultaneous
regression results are reported in Panel B of Table 4. Column 1 shows that TMTCareer loads sig-
nificantly and positively in the regression of Mgt_Emp_Misalign, confirming that job-hopping
preferences are associated with greater manager-employee misalignment. Column 2 reports that
both TMTCareer and Mgt_Emp_Misalign are significantly and negatively associated with
Emp_CultureRating. Panel C of Table 4 summarizes the direct and indirect effects based on Panel
B of Table 4. On average, 4.08% of the estimated total effect of job-hopping preferences on cul-
tural ratings is mediated by manager-employee value misalignment (i.e., the indirect effect), which
is statistically significant. The mediation analysis suggests that both the direct and the indirect
effects (via misalignment) exist between job-hopping preferences and culture ratings.
TABLE 4 Employees’ assessment of culture.

Panel A: Job-hopping preferences and employees’ assessment of culture
(1) (2) (3)
Emp_CultureRating Emp_PositiveRating Emp_NegativeRating
TMTCareer 0.009** 0.003* 0.003**

(2.489) (2.116) (2.693)
ExConnect 0.001 0.000 0.000
(0.847) (0.452) (0.489)
InConnect 0.017 0.007 0.006
(0.754) (1.000) (0.796)
LogAT 0.122*** 0.039*** 0.032***
(5.495) (5.752) (5.204)
Seg 0.008 0.004 0.001
(1.411) (1.783) (0.630)
Lev 0.409*** 0.132*** 0.081**
(3.916) (4.199) (2.300)
Growth 0.059 0.027 0.015
(0.774) (1.272) (0.484)
MTB 0.009** 0.003*** 0.002**
(3.068) (3.398) (2.514)
Return 0.061** 0.018** 0.019**
(2.299) (2.263) (2.746)
ROA 0.372 0.109 0.111
(1.814) (1.487) (1.424)
Loss 0.057 0.027 0.017
(1.250) (1.764) (1.079)
TMTIncentive 0.013 0.003 0.001
(1.299) (0.959) (0.582)
TMTAbility 0.127 0.038 0.029
(1.522) (1.589) (1.342)
CEOFemale 0.056 0.011 0.005
(0.744) (0.453) (0.194)
CEOChange 0.024 0.014 0.006
(0.801) (1.096) (0.681)
TMTFemale 0.066 0.033 0.011
(0.703) (0.956) (0.494)
TMTAge 0.002 0.001 0.001
(0.424) (0.949) (0.612)
TMTSize 0.032* 0.010** 0.007
(2.231) (2.767) (1.354)
NumEmp 0.088*** 0.030*** 0.020**
(4.113) (4.431) (2.962)
TMTExperience 0.006 0.002 0.001
(0.900) (0.829) (0.472)
(Continues)
TABLE 4 (Continued)
Panel A: Job-hopping preferences and employees’ assessment of culture
(1) (2) (3)
Emp_CultureRating Emp_PositiveRating Emp_NegativeRating
InternalHire 0.030 0.000 0.017

(0.491) (0.009) (1.045)
Year FE Yes Yes Yes
Industry FE Yes Yes Yes
Cluster Firm, year Firm, year Firm, year
Observations 3,304 3,304 3,304
Panel B: Job-hopping preferences, manager-employee misalignment, and culture ratings
(1) (2)
Mgt_Emp_Misalign Emp_CultureRating
TMTCareer 0.008*** 0.009***

(3.640) (3.886)
Mgt_Emp_Misalign 0.045**
(2.451)
Controls Yes Yes
Year FE Yes Yes
Industry FE Yes Yes
Observations 3,304 3,304
Panel C: Test of mediation effect
Effect Mean 95% Confidence interval
Direct Effect 0.0088

(TMTCareer à Emp_CultureRating)
Indirect Effect 0.0004
(TMTCareer à Mgt_Emp_Misalign à Emp_CultureRating)
% of effect mediated 4.08% 2.81% 7.84%
Note: This table presents the regression results for testing H2. In Panel A, Column 1 reports the results for analyzing employees’ overall
culture ratings. Column 2 reports the results for analyzing the likelihood of receiving more positive ratings. Column 3 reports the results
for analyzing the likelihood of receiving more negative ratings. Panel B of this table reports the regression results for testing the
mediation effect of manager-employee value misalignment on employees’ overall culture ratings. In Panel B, Column 1 reports the
results for analyzing the effect of job-hopping preferences on manager-employee value misalignment. Column 2 reports the regression
results when both job-hopping preferences and manager-employee value misalignment are added in the analysis of employees’ culture
ratings. Panel C reports the average direct effect and the average indirect effect as well as the percentage of effect mediated via manager-
employee value misalignment (i.e., the indirect effect). Standard errors are adjusted for heteroscedasticity and clustered at firm and year
levels. Standard errors are adjusted for heteroscedasticity in the mediation analysis. t-statistics are reported in parentheses. All
continuous variables are winsorized at the 1st and 99th percentiles. Variable definitions are presented in Appendix 4.
4.3.2 | Alternative explanation: Managers do not “walk the talk”

An alternative explanation for lower culture ratings is that managers do not follow through on
what they say in conference calls. While the evidence documented in Li et al. (2021) does not
support this alternative explanation, we conduct analyses to shed light on this issue in our set-
ting. First, we analyze employees’ negative comments on each cultural value from Glassdoor. If
job-hopping managers who pay more attention to innovation and less attention to other soft
cultural values act accordingly, they are likely to receive fewer negative comments on innova-
tion and more negative comments on soft cultural values from employees. We calculate the fre-
quency of culture-related words for each cultural value in employees’ negative comments
(posted under the “cons” section) of corporate culture. For example, the variable,
NegCom_Respect, refers to the ratio of respect-related words in the employees’ negative com-
ments of corporate culture.
Panel A of Table 5 reports the results. The negative coefficient on TMTCareer in Column
1 (0.005, p < 0.10) suggests that job-hopping managers receive fewer negative comments on
innovation from employees. In Columns 2 and 4, we find that job-hopping managers receive
more negative comments on integrity and respect (0.003, p < 0.05; 0.014, p < 0.05, respectively).
The combined evidence suggests that job-hopping managers perform better in innovation but
worse on integrity and respect.25
Second, we use workplace practices as alternative measures for managers’ actions. We
obtain scores related to workforce quality, human rights, and product responsibility from
the Refinitiv ESG database.26 Specifically, workforce quality scores (WorkForce) reflect
firms’ effectiveness in improving job satisfaction, providing a healthy and safe workplace,
and maintaining diversity and equal opportunities; human rights scores (HumanRight) rep-
resent firms’ effectiveness in terms of respecting fundamental human rights conventions;
product responsibility scores (ProductRespon) refer to firms’ capacity to produce quality
goods and services and integrate customers’ health and safety (Refinitiv, 2022). When job-
hopping managers pay less attention to soft cultural values and accordingly put less effort
to embed the soft values into employees’ day-to-day work, they are more likely to receive
low ratings on the workplace practices. The results summarized in Panel B of Table 5 show
that the coefficient of TMTCareer is indeed negative and significant across the three work-
place practice ratings, suggesting the lack of effort of job-hopping managers on soft, less
observable values.
Taken together, the analyses based on different proxies for managers’ actions are not in line
with the alternative that managers do not act on what they talk about in the conference calls.
The low overall culture ratings associated with job-hopping managers are more likely to be
driven by the value misalignment between managers and employees that we document in our
analyses.
5 | ADDITIONAL ANALYSES AND ROBUSTNESS CHECKS
5.1 | Consequences of insufficient attention to less observable cultural values

We expect managers’ job-hopping preferences, which direct their attention away from less
observable cultural values that are critical to internal processes, to have an adverse impact
on the quality of the controls. To shed light on this issue, we investigate whether job-
hopping preferences are associated with increased financial misreporting risk. We use the
F-score developed by Dechow et al. (2011) to proxy for a firm’s probability of financial mis-
statement and find support that managers’ job-hopping preferences are associated with an
increased risk of financial misstatement. As shown in Panels A and B of Table 6, we also
perform a mediation analysis and find that on average 8.22% of the effect of job-hopping
preferences on financial misreporting risk is mediated via less effective corporate culture as
proxied by employees’ overall culture ratings. These results demonstrate the potential for
25
When we analyze employees’ positive comments, TMTCareer does not load significantly on any of cultural values.
26
Refinitiv ESG is a third-party agency that scores firms’ environmental, social, and governance performance based on the content
analyses of various publicly disclosed information such as annual reports, CSR reports, NGO websites, company websites, news sources,
and stock exchange filings.
22
TABLE 5 Tests of managers’ culture-building activities.
Panel A: Analysis of employees’ negative comments on cultural values

(1) (2) (3) (4) (5)
NegCom_Innovation NegCom_Integrity NegCom_Teamwork NegCom_Respect NegCom_Quality
TMTCareer 0.005* 0.003** 0.001 0.014** 0.000

(1.957) (2.965) (0.975) (2.384) (0.181)
Controls Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes
Industry FE Yes Yes Yes Yes Yes
Cluster Firm, year Firm, year Firm, year Firm, year Firm, year
Observations 3,304 3,304 3,304 3,304 3,304
Panel B: Analysis of workplace practices
(1) (2) (3)
WorkForce HumanRight ProductRespon
TMTCareer 0.034* 0.057** 0.047*

(1.809) (2.477) (1.939)
Controls Yes Yes Yes
Year FE Yes Yes Yes
Note: This table presents the results for analyzing an alternative explanation for the low culture ratings associated with job-hopping managers. Panel A reports the regression results for testing employees’
negative comments on each cultural value. Panel B reports the regression results for testing workplace practices. Standard errors are adjusted for heteroscedasticity and clustered at firm and year levels. t-
statistics are reported in parentheses. All continuous variables are winsorized at the 1st and 99th percentiles. Variable definitions are presented in Appendix 4.
CONTEMPORARY ACCOUNTING RESEARCH
TABLE 6 Job-hopping preferences, culture ratings, and financial misreporting risks.

Panel A: Regression results
(2) (3)
(1) Mediation analysis
HighFscore Emp_CultureRating HighFscore
TMTCareer 0.039*** 0.009*** 0.005**

(2.594) (4.041) (2.470)
Emp_CultureRating 0.048***
(3.016)
Controls Yes Yes Yes
Year FE Yes Yes Yes
Panel B: Test of mediation effect
Effect Mean 95% Confidence interval
Direct effect 0.0051

(TMTCareer à HighFscore)
Indirect Effect 0.0005
(TMTCareer à Emp_CultureRating à HighFscore)
% of effect mediated 8.22% 4.66% 23.69%
Note: This table presents the regression results for testing the corporate outcomes of managers’ job-hopping preferences in relation to
financial misreporting risks measured by F-scores. Panel A reports the regression results. Column 1 reports the results for testing the
effect of job-hopping preferences on the likelihood of having a high F-score. Columns 2 and 3 report the results for simultaneous
regressions testing the influence of job-hopping preferences on employees’ culture ratings and the mediation effect of culture ratings on
financial misreporting risks. Panel B reports the average direct effect, the average indirect effect, and the percentage of effect of job-
hopping preferences on financial misreporting risks that is mediated by culture. Standard errors are adjusted for heteroscedasticity and
clustered at firm and year levels. Standard errors are adjusted for heteroscedasticity in the mediation analysis. t-statistics are reported in
parentheses. All continuous variables are winsorized at the 1st and 99th percentiles. Variable definitions are presented in Appendix 4.
managers’ job-hopping preferences to give rise to control issues that increase the financial
misreporting risk.
5.2 | Alternative ways of forming firm-level managers’ job-hopping preferences

Given the importance of CEOs, we also test our hypothesis by replacing the firm-level career
preferences with the CEOs’ career preferences. Panel A of Table 7 presents the results that are
consistent with our main findings. In addition, it is the CEOs and the CFOs who often talk and
answer questions in conference calls. While we argue that what CEOs and CFOs say in the con-
ference calls should reflect the overall TMT’s preferences, we nevertheless perform an addi-
tional analysis in which we only use CEOs’ and CFOs’ (rather than the TMT’s) past tenure to
measure the firm-level job-hopping preferences. Results reported in Panel B of Table 7 show
that our findings remain unchanged. Finally, to address the concern that the average executives’
past tenure might be significantly influenced by a few executives who have very long (or short)
tenure in past jobs, we create an indicator variable that equals one for firms in which more than
half of the executives exhibit strong job-hopping preferences (i.e., past employment tenure is
lower than the sample median), and zero otherwise. Results tabulated in Panel C of Table 7
24
TABLE 7 Alternative firm-level measures of TMT job-hopping preferences.

Panel A: CEO job-hopping
(1) (2) (3) (4) (5)
Mgt_SoftCul Mgt_DiffCul Mgt_Emp_Diff_Innovation Mgt_Emp_Misalign Emp_CultureRating
CEOCareer 0.019*** 0.008** 0.009 0.004* 0.004*

(2.967) (2.544) (1.807) (1.986) (2.052)
Observations 6,479 6,544 3,304 3,304 3,304
Panel B: CEO and CFO job-hopping
(1) (2) (3) (4) (5)
CEOCFOCareer 0.026** 0.013** 0.025** 0.008* 0.007**

(2.142) (2.335) (3.180) (2.030) (2.809)
Observations 6,479 6,544 3,304 3,304 3,304
Panel C: Majority executives job-hopping
(1) (2) (3) (4) (5)
MajorityCareer 0.239** 0.127** 0.146* 0.041* 0.070**

(2.408) (2.464) (2.149) (1.897) (2.287)
CONTEMPORARY ACCOUNTING RESEARCH
TABLE 7 (Continued)
Panel C: Majority executives job-hopping
(1) (2) (3) (4) (5)

Observations 6,479 6,544 3,304 3,304 3,304
Note: This table presents the results when alternative methods are used to construct firm-level job-hopping preferences. Panel A reports the results when firm-level job-hopping preferences are measured by
the CEOs’ past tenure. Panel B reports the results when firm-level job-hopping preferences are measured by the average past tenure of the CEOs and the CFOs. Panel C reports the results when firm-level
job-hopping preferences are measured by whether the majority of the executives have lower-than-median past tenure. Standard errors are adjusted for heteroscedasticity and clustered at firm and year levels.
t-statistics are reported in parentheses. All continuous variables are winsorized at the 1st and 99th percentiles. Mgt_SoftCul: an indicator variable that represents those firms where top executives pay the
most attention to less observable or soft cultural values; Mgt_DiffCul: is the degree of managerial attention distortion between less observalues values and more observable values;
Mgt_Emp_Diff_Innovation: is the difference between managers’ attention and employees’ attention to the innovation culture value; Mgt_Emp_Misalign: is the misalignment between managers’ and
employees’ attention to cultural values. Variable definitions are presented in Appendix 4.
CAREER PREFERENCES AND CORPORATE CULTURE
25
show that our main findings are robust to this alternative measure of firm-level job-hopping
preferences.
5.3 | Mitigating endogeneity concerns

We perform a series of robustness checks to mitigate endogeneity concerns. First, following
Larcker and Rusticus (2010), we analyze the impact threshold of a confounding variable
(ITCV) and find that an omitted variable is unlikely to have an impact that is strong enough
to invalidate our inferences.27 Second, we perform analyses based on propensity score
matching or entropy balancing between high TMTCareer (i.e., TMTCareer higher than the
sample median) and low TMTCareer firms (i.e., TMTCareer lower than the sample
median). Results reported in Appendices S1 and S2 show that our main findings remain
unchanged. Third, we conduct a difference-in differences analysis around CEO turnovers.
Results are reported in Appendix S3. Compared to firms with an unchanged or decreasing
TMTCareer around CEO turnovers, firms with an increasing TMTCareer during CEO
turnovers are less likely to focus on the less observable cultural value after the CEO turn-
over events. Overall, even though we cannot completely rule out the potential endogeneity
issues, results from the robustness checks help mitigate the endogeneity concerns.
6 | CONCLUSION
Given that corporate culture constitutes an important part of management control systems
and is critical to firm value, it is a puzzle as to why some firms develop effective corporate
culture and others do not. We attempt to address this conundrum by examining how differ-
ences in managers’ career preferences influence their allocation of attention to corporate
culture. Our study builds on the culture framework proposed by Graham et al. (2022) and
makes two important extensions. First, we incorporate the multidimensional feature of cor-
porate culture rather than treating corporate culture as a unidimensional construct. Second,
we consider the roles of managers and employees in building shared values. The two exten-
sions allow us to examine the potential value misalignment between managers and
employees and investigate how the misalignment influences the effectiveness of corporate
culture as assessed by employees.
We show that managers’ job-hopping preferences direct their attention away from less
observable soft cultural values (e.g., respect and integrity) to the cultural values (innovation)
that are more observable in the external labor market. The insufficient managerial attention to
soft cultural values is not in line with the importance that employees assign to them and results
in less effective corporate culture as assessed by employees, which could lead to an increased
risk of financial misreporting. We contribute to the corporate culture literature by highlighting
that the manager-employee value misalignment arising from managers’ job-hopping preferences
is a critical determinant of corporate culture that builds upon shared values.
27
The ITCV for TMTCareer is 0.018 in the analysis of Mgt_SoftCul, which means that the partial correlation between a potential
omitted variable and Mgt_SoftCul and the partial correlation between a potential omitted variable and TMTCareer need to have a
product higher than 0.018 in order to invalidate the significant coefficient of TMTCareer. To put the ITCV statistic into perspective, we
compare the required partial correlation with the correlations between the control variables and the dependent (independent) variables.
We find that only variables TMTAge and ExConnect have products of partial correlations that are higher than 0.018 (0.022 and 0.020
respectively). Similar patterns are observed for other dependent variables. Given the variety of control variables included in our model
and that most of them do not exceed the ITCV of TMTCareer, it is unlikely that an omitted variable could have an impact that is strong
enough to invalidate our inferences.
A CK NO W L E D G M E N T S
We thank Flora Yu Kuang, Laurence van Lent, Vic Naiker, Bo Qin, Mario Schabus, and Wim
Van der Stede (discussant) for the valuable discussions on this manuscript. We benefited from
the constructive comments provided by workshop participants at Bocconi University, Hong
Kong Polytechnic University, Ludwig-Maximilians-University in Munich, National Taiwan
University, National University of Singapore, 2023 AFAANZ at Gold Coast, and 2021 Global
Management Accounting Research Symposium (virtual) hosted by Copenhagen Business
School. We appreciate Rui Shen for sharing the corporate culture data. We also acknowledge
the constructive advice we have received from the editor, reviewers, and the editor-in-chief.
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SU P PO RT I NG I NF O RM AT IO N
Additional supporting information can be found online in the Supporting Information section
at the end of this article.
How to cite this article: Abernethy, M. A., Hung, C.-Y., & Jiang, L. (2024). Managers’
career preferences and corporate culture. Contemporary Accounting Research, 1–34.
https://doi.org/10.1111/1911-3846.12948
A PPE ND I X 1 : VALIDATION TEST — PAST JOB TENURE AND FUTURE

JOB-HOPPING LIKELIHOOD
To lend support to the premise that managers’ past job tenure reflects their career preferences
and predicts their future job-hopping propensity, we test the association between a manager’s
past job tenure (iPastTenure) and their likelihood of moving to another firm using
individual-level analyses. When an executive leaves the current firm and subsequently takes an
executive position in another firm, the turnover is most likely to be voluntary (Gao et al., 2015).
We predict that a manager’s average tenure in past jobs (before joining the current firm) is neg-
atively associated with a job-hopping likelihood.
The analyses are based on a merged sample of the BoardEx and ExecuComp datasets, and
the sample period spans from 2000 to 2017.28 Based on a firm-executive-year sample, we create
an indicator variable (JobHop) that indicates whether a manager finds another job within
2 years of leaving the current firm.29 Table 8 reports the regression results. Across three
28
We obtain data on each executive’s past employment history from BoardEx and merge these data with the identified executives in
ExecuComp data. We merge them by firms’ CIK code, year, and the executive’s last name. The sample period starts in the year 2000,
the earliest data available year in BoardEx. Since we consider job-hopping events as a manager finding another job within 2 years of
leaving the current firm, our sample period stops in 2017.
29
Our measure is based on the annual ExecuComp database, which does not allow us to precisely measure the job searching period. We
use an example to illustrate how we measure JobHop. Suppose a given manager at firm A in year t is no longer working for firm A at t
+ 1 but is a manager at another firm B either at year t + 1, t + 2, or t + 3. The variable JobHop for the manager in Firm A in year t will
equal 1. When the manager leaves Firm A in the middle of year t + 1 and takes the new position early in year t + 3 at Firm B, the
transition period is less than 2 years.
TABLE 8 Individual managers’ past job tenure and future job-hopping likelihood.
(1) JobHop (2) JobHop (3) JobHop
iPastTenure 0.412*** 0.338*** 0.003***

(3.504) (2.850) (2.924)
iExConnect 0.252*** 0.242*** 0.002***
(6.310) (5.963) (5.124)
iInConnect 0.424** 0.416*** 0.002
(2.571) (2.604) (1.244)
iIncentive 0.141*** 0.146*** 0.002***
(7.550) (7.787) (5.472)
logComp 0.114 0.238*** 0.003***
(1.323) (3.046) (2.708)
logExperience 0.033 0.036 0.001
(0.474) (0.498) (1.000)
Female 0.002 0.040 0.002
(0.014) (0.227) (0.775)
Age 0.037*** 0.037*** 0.000***
(4.053) (4.041) (3.569)
CEO 1.921*** 1.883*** 0.007***
(6.708) (6.359) (6.190)
avgJobHop 27.756***
(6.058)
TMTSize 0.314*** 0.298*** 0.004***
(5.399) (5.270) (4.407)
CEO&Chair 0.297** 0.307*** 0.005**
(2.534) (2.727) (2.383)
Return 0.042 0.010 0.002
(0.276) (0.066) (1.198)
ROA 0.520 0.847 0.001
(0.596) (0.999) (0.141)
LogAT 0.335*** 0.284*** 0.003
(5.615) (5.328) (1.608)
MTB 0.152** 0.054 0.000
(2.330) (0.861) (0.167)
R&D 2.835 3.985** 0.024
(1.556) (2.082) (0.419)
Invest 3.114 1.848 0.022
(1.398) (0.936) (0.972)
Lev 0.499 0.375 0.007
(1.351) (1.107) (1.341)
InternalHire 0.169 0.127 0.004
(1.038) (0.900) (0.813)
Constant 5.311*** 4.713*** 0.000
(6.064) (5.883) (0.033)
(Continues)
TABLE 8 (Continued)
(1) JobHop (2) JobHop (3) JobHop
Industry FE Yes Yes No

Year FE Yes Yes Yes
Firm FE No No Yes
Observations 43,797 43,797 46,848
Adjusted/pseudo R2 0.117 0.154 0.015
Note: This table presents an individual-level analysis of the association between a manager’s past job tenure and the likelihood of their
moving to other firms. The control variables included in the regressions are the manager’s age (Age), gender (Female), external
connections (iExConnect), internal connections (iInConnect), total compensation (logComp), experience (logExperience), forgone
benefits associated with restricted stock and unexercisable in-the-money stock options (iIncentive) (Balsam & Miharjo, 2007), whether
the CEO is a chairman (CEO&Chair), an indicator variable (CEO) to distinguish between the CEO and other named executive officers.
We control for firms’ performance (ROA and Return), size (LogAT), market-to-book ratio (MTB), research and development intensity
(R&D), leverage (Lev), investment levels (Invest), and the percentage of CEOs who were internally promoted in the past (InternalHire).
Columns 1 and 2 report the results of logit regressions, and Column 3 includes the firm fixed effect and reports the results based on an
OLS regression. Test statistics (i.e., t- or Z-statistics) are reported in parentheses.All continuous variables are winsorized at the 1st and
99th percentiles.
*, **, and *** represent statistical significance at the 10%, 5%, and 1% levels, respectively, based on two-tailed tests.
regressions, including controlling for the average job-hopping rate for a given firm over the
sample period (avgJobHop) or adding firms fixed effects, the coefficient of iPastTenure remains
negative and statistically significant, which are consistent with our prediction that a longer past
job tenure decreases the probability of switching to another firm. Our inferences are also robust
to Cox proportional hazard regressions.30 Furthermore, when we include individual fixed
effects in our estimation, the coefficient on iPastTenure is no longer significant. The evidence is
consistent with the idea that our measure of job-hopping preference captures a time-invariant
individual characteristic rather than other time-varying contextual factors.
Another potential confounding factor is internal promotion opportunity. However, a rea-
sonable empirical proxy for a manager’s ex ante promotion probability is lacking. As an alter-
native empirical strategy, we select a setting in which the internal promotion likelihood is
equally absent for all non-executives. Specifically, we focus on a sample of firms that appointed
new CEOs and select the remaining non-CEO executives who have missed the bid for CEOs. In
this sample, the internal promotion likelihood in the near future is nearly zero, and we continue
to find a negative association between iPastTenure and JobHop (in untabulated results). Taken
together, the results provide supporting evidence for our premise that managers’ longer past job
tenure captures the persistent preferences for a lower job-hopping likelihood.
A PPE ND I X 2 : PCA OF FIVE CULTURAL VALUES
To provide supporting evidence for grouping integrity, teamwork, respect, and quality as a less
observable cultural dimension that is different from the more observable cultural dimension of
innovation, we perform a PCA of the five cultural values from Li et al. (2021). Our study
focuses on managers’ attention distribution across different cultural values within firms rather
than the variations in cultural values across firms. To unveil the attention allocation pattern
within a firm, we subtract the mean of the five cultural values from each cultural value for each
firm. Panel A of Table 9 presents the results of eigenvalues for components based on the PCA
of the demeaned variables of cultural values. The first component has an eigenvalue higher than
30
In the Cox proportional hazard regressions, we estimate whether managers’ past job tenure relates to the time elapsed from the start of
the manager’s tenure until a job-hopping event occurs (i.e., time until the job-hopping incidence). The finding that an increase in a
manager’s past average tenure is associated with a lower hazard of experiencing a job-hopping event provides further support for our
measure of job-hopping preferences.
TABLE 9 Results of principal component analysis (PCA).

Panel A: Eigenvalues of components
Component Eigenvalue Difference Proportion Cumulative
Comp1 1.157 0.761 0.583 0.583

Comp2 0.396 0.079 0.200 0.782
Comp3 0.318 0.203 0.160 0.942
Comp4 0.115 0.115 0.058 1.000
Panel B: Variable loadings
Variable Comp1 Comp2 Comp3 Comp4
Innovation 0.889 0.083 0.016 0.052

Integrity 0.294 0.221 0.413 0.703
Teamwork 0.199 0.060 0.524 0.694
Respect 0.250 0.479 0.701 0.128
Quality 0.146 0.843 0.251 0.067
Note: This table presents the results of the PCA of five de-demeaned cultural values. Panel A presents the eigenvalue for each
component and the degree of variation captured by each component (proportion). Panel B presents the loadings of each variable on each
component.
1 and explains 58.3% of the variations. Panel B of Table 9 presents the loading of each variable for
each component. It shows that while integrity, teamwork, respect, and quality all load positively on
the first component, innovation loads negatively on the first component and has the largest magni-
tude. These results support our empirical choice of grouping integrity, teamwork, respect, and qual-
ity as one cultural dimension that is different from the cultural dimension of innovation.
A PPE ND I X 3 : THE RELATIVE IMPORTANCE OF CULTURAL VALUES TO

EMPLOYEES
We analyze the association between the overall culture ratings and employees’ assessment of
five cultural values to support the idea that employees are more concerned about soft, less
observable values than more observable values. To construct proxies for employees’ assessment
of each cultural value, we use their positive and negative comments (i.e., written comments on
“pros” and “cons”). Arguably, when employees have more positive comments than negative
comments on a specific cultural value, the employees are more likely to assign a positive assess-
ment to this value. For each cultural value, we create a binary variable to proxy for employee
positive assessment (e.g., DCom_Innovation).
Our analyses are at the employee review level. We examine the association between
employees’ overall culture ratings and the five cultural value assessments. The coefficients on
the five binary variables represent the importance of each cultural value for employees’ overall
culture ratings. The results are reported in Table 10. Column 1 does not control for any firm-
level characteristics, and Column 2 does. We base our interpretation on Column 3 where we
control firm-level characteristics and firm fixed effects. The assessments of different cultural
values are all significantly positive, meaning that employees are concerned about all
cultural values. However, the assessment of respect (DCom_Respect) has the largest coefficient
magnitude (0.617, p < 0.01) and the second largest is DCom_Integrity (0.415, p < 0.01). The
coefficient on the assessment of innovation (DCom_Innovation) has the smallest magnitude
(0.113, p < 0.01). The evidence suggests that employees are more concerned about soft, less
observable values (especially respect and integrity) than the more observable value
(i.e., innovation).
TABLE 10 Relative importance of different cultural values to employees.

(1) (2) (3)
Emp_CultureRating Emp_CultureRating Emp_CultureRating
DCom_Innovation 0.205*** 0.163*** 0.113**

(3.429) (2.787) (2.096)
DCom_Integrity 0.457*** 0.447*** 0.415***
(27.504) (28.890) (30.816)
DCom_Teamwork 0.408*** 0.312*** 0.208*
(3.215) (2.645) (1.907)
DCom_Respect 0.655*** 0.649*** 0.617***
(39.088) (40.434) (43.176)
DCom_Quality 0.125*** 0.127*** 0.126***
(7.457) (7.636) (9.760)
Controls No Yes Yes
Year FE Yes Yes Yes
Industry FE Yes Yes No
Firm FE No No Yes
Observations 643,192 643,192 643,192
Adj-R2 0.074 0.089 0.119
Note: This table presents an employee review level analysis of the sensitivity of employee overall culture ratings to employee assessment
of different cultural values. All columns report the results based on an OLS regression. Test statistics are reported in parentheses. All
continuous variables are winsorized at the 1st and 99th percentiles.
*, **, and *** represent statistical significance at the 10%, 5%, and 1% levels, respectively, based on two-tailed tests.
A PPE ND I X 4 : VARIABLE DEFINITIONS
Variable Definition
Independent variables about job-hopping preferences

TMTCareer Firm-level career preferences measured as the average past employment tenure of the
top executives in the TMT, multiplied by 1
HighTMTCareer Indicator variable equal to one if TMTCareer is above the sample median, and zero
otherwise
MajorityCareer Indicator variable equal to one if more than half of the executives in the TMT have
lower-than-median past employment tenure, and zero otherwise
CEOCareer CEO career preferences measured as the average past employment tenure of the CEO,
multiplied by 1
CEOCFOCareer CEO and CFO career preferences measured as the average past employment tenure of
the CEO and the CFO, multiplied by 1
Dependent variables about managers’ attention to cultural values
Mgt_Innovation Score of managers’ perceived importance of innovation based on Li et al. (2021)
Mgt_Integrity Score of managers’ perceived importance of integrity based on Li et al. (2021)
Mgt_Teamwork Score of managers’ perceived importance of teamwork based on Li et al. (2021)
Mgt_Respect Score of managers’ perceived importance of respect based on Li et al. (2021)
Mgt_Quality Score of managers’ perceived importance of quality based on Li et al. (2021)
APPENDIX (Continued)
Variable Definition
Mgt_SoftCul Indicator variable equal to one if any of the less observable cultural values (i.e.,
integrity, teamwork, respect, or quality based on Li et al. (2021)) has the highest
score among the five cultural values within a firm, and zero otherwise
Mgt_DiffCul Difference between Mgt_Innovation and the average of the four less observable cultural
values based on Li et al. (2021)
Dependent variables about employees’ attention to cultural values
Emp_Innovation Score of employees’ perceived importance of innovation based on Glassdoor
Emp_Integrity Score of employees’ perceived importance of integrity based on Glassdoor
Emp_Teamwork Score of employees’ perceived importance of teamwork based on Glassdoor
Emp_Respect Score of employees’ perceived importance of respect based on Glassdoor
Emp_Quality Score of employees’ perceived importance of quality based on Glassdoor
Emp_SoftCul Indicator variable equal to one if any of the less observable cultural values based on
Glassdoor has the highest score among the five cultural values within a firm, and
zero otherwise
Emp_DiffCul Difference between Emp_Innovation and the average of the four less observable cultural
values based on Glassdoor
Dependent variables about manager-employee attention misalignment
Mgt_Emp_Diff_Innovation Difference between standardized Mgt_Innovation and standardized Emp_Innovation
Mgt_Emp_Diff_Integrity Difference between standardized Mgt_Integrity and standardized Emp_Integrity
Mgt_Emp_Diff_Teamwork Difference between standardized Mgt_Teamwork and standardized Emp_Teamwork
Mgt_Emp_Diff_Respect Difference between standardized Mgt_Respect and standardized Emp_Respect
Mgt_Emp_Diff_Quality Difference between standardized Mgt_Quality and standardized Emp_Quality
Mgt_Emp_Misalign Indicator variable equal to one if Mgt_SoftCul equals zero and Emp_SoftCul equals
one
Employees’ assessment of culture
Emp_CultureRating Average culture ratings from employees based on Glassdoor
Emp_PositiveRating Percentage of positive culture ratings from employees based on Glassdoor
Emp_NegativeRating Percentage of negative culture ratings from employees based on Glassdoor
NegCom_Innovation Frequency of innovation-related words in employees’ negative comments
NegCom_Integrity Frequency of integrity-related words in employees’ negative comments
NegCom_Teamwork Frequency of teamwork-related words in employees’ negative comments
NegCom_Respect Frequency of respect-related words in employees’ negative comments
NegCom_Quality Frequency of quality-related words in employees’ negative comments
Other dependent variables
WorkForce Scores of work force quality from Refinitiv ESG
HumanRight Scores of human rights from Refinitiv ESG
ProductRespon Scores of product responsibilities from Refinitiv ESG
HighFscore Indicator variable equal to one if Fscore is higher than one, and zero otherwise, where
Fscore is calculated based on the parameters in Dechow et al. (2011)
Control variables
TMTIncentive Long-term incentives in compensations measured as the total value of options and
restricted stocks that will be forfeited if the executive leaves the firm scaled by the
executive’s total compensation
ExConnect Average external social connections of top executives in a given firm
(Continues)
APPENDIX (Continued)
Variable Definition
InConnect Average internal social connections of top executives in a given firm

LogAT Natural logarithm of total assets
Seg Number of business segments
Lev Leverage ratio calculated as total long-term debts to total assets
Growth Sales growth calculated as the percentage change of sales from prior year
MTB Market-to-book ratio calculated as market value to book value at fiscal-year-end
Return Annual stock return calculated as the change of stock price from beginning of the year
to fiscal-year end scaled by the price at the start of the year
ROA Return on assets calculated as net income to total assets
Loss Indicator variable equal to one if net income is negative, and zero otherwise
TMTAbility Managerial ability scores from Demerjian et al. (2012)
CEOFemale Indicator variable equal to one if the CEO is female, and one otherwise
CEOChange Indicator variable equal to one if the firm-year has a CEO turnover, and zero otherwise
TMTFemale Percentage of female executives in the top management team
TMTAge Average age of top executives in a given firm
TMTSize Number of top executives in a given firm
TMTExperience Average experience in holding executive positions of top executives
NumEmp Natural logarithm of number of employees
InternalHire Percentage of CEOs who are internally promoted in the past

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Received: 20 January 2021 Accepted: 14 March 2024

Managers’ career preferences and corporate culture

Margaret A. Abernethy | Chung-Yu Hung | Like Jiang

Faculty of Business and Economics, Abstract

Les préférences professionnelles des cadres et la

Accepted by Clara Xiaoling Chen.

© 2024 Canadian Academic Accounting Association.

Contemp Account Res. 2024;1–34. wileyonlinelibrary.com/journal/care 1

et des employés, compromettant ainsi le développement de

2 | PRIOR LITERATURE AND HYPOTHESES DEVELOPMENT

Hypothesis 1 (H1). Job-hopping managers place greater importance on more

3.1 | Sample and data

3.2 | Measure of job-hopping career preferences

TABLE 1 Sample distribution.

Consumer non-durables 534

3.3 | Measures of managers’ attention to cultural values

3.4 | Measures of employees’ assessment of cultural values

3.5 | Descriptive statistics

TABLE 2 Summary statistics.

Independent variable and culture variables

4 | MAIN MODELS AND RESULTS

CultureVari,tþ1 ¼ α1 TMTCareeri,t þ Controls þ εi,t , ð1Þ

4.2 | Job-hopping preferences and managers’ attention to cultural values (H1)

TABLE 3 Managers’ attention to cultural values.

TMTCareer 0.049*** 0.020** 0.051 0.008 0.034* 0.059***

InternalHire 0.297 0.097 1.425* 0.073 0.608 0.226

TMTCareer 0.016* 0.005 0.012 0.009 0.020 0.008**

4.2.2 | Do job-hopping managers benefit from focusing on the more

4.2.3 | Do job-hopping preferences increase the manager-employee value

4.3 | Job-hopping preference and the effectiveness of corporate culture (H2)

4.3.1 | Are job-hopping managers associated with less effective corporate

TABLE 4 Employees’ assessment of culture.

TMTCareer 0.009** 0.003* 0.003**

InternalHire 0.030 0.000 0.017

TMTCareer 0.008*** 0.009***

Direct Effect 0.0088

4.3.2 | Alternative explanation: Managers do not “walk the talk”

5 | ADDITIONAL ANALYSES AND ROBUSTNESS CHECKS

5.1 | Consequences of insufficient attention to less observable cultural values

TABLE 5 Tests of managers’ culture-building activities.

Panel A: Analysis of employees’ negative comments on cultural values

TMTCareer 0.005* 0.003** 0.001 0.014** 0.000

TMTCareer 0.034* 0.057** 0.047*

TABLE 6 Job-hopping preferences, culture ratings, and financial misreporting risks.

TMTCareer 0.039*** 0.009*** 0.005**

Direct effect 0.0051

5.2 | Alternative ways of forming firm-level managers’ job-hopping preferences

TABLE 7 Alternative firm-level measures of TMT job-hopping preferences.

CEOCareer 0.019*** 0.008** 0.009 0.004* 0.004*

CEOCFOCareer 0.026** 0.013** 0.025** 0.008* 0.007**

MajorityCareer 0.239** 0.127** 0.146* 0.041* 0.070**

Industry FE Yes Yes Yes Yes Yes

5.3 | Mitigating endogeneity concerns

A PPE ND I X 1 : VALIDATION TEST — PAST JOB TENURE AND FUTURE

iPastTenure 0.412*** 0.338*** 0.003***

Industry FE Yes Yes No

A PPE ND I X 2 : PCA OF FIVE CULTURAL VALUES

TABLE 9 Results of principal component analysis (PCA).

TMTCareer 0.049* 0.020 0.051 0.008 0.034* 0.059***

TMTCareer 0.008* 0.009*

TMTCareer 0.005* 0.003 0.001 0.014 0.000

TMTCareer 0.039* 0.009* 0.005**

CEOCareer 0.019* 0.008 0.009 0.004* 0.004*

CEOCFOCareer 0.026 0.013 0.025** 0.008* 0.007**

MajorityCareer 0.239 0.127 0.146* 0.041* 0.070**

iPastTenure 0.412* 0.338* 0.003***

DCom_Innovation 0.205* 0.163* 0.113**