Working Papers


Selected Working Papers 

Working Research Papers on a wide range of corporate governance related issues are available on the Corporate Governance Network, Social Science Research Network (SSRN).  Free registration may be required to access  SSRN. 

  • Detecting Deceptive Discussions in Conference Calls 
    David F. Larcker, and Anastasia A Zakolyukina; Journal of Accounting Research, Forthcoming
    Study finds that deceptive CEOs use significantly fewer self-references, more third person plural and impersonal pronouns, more extreme positive emotions, fewer extreme negative emotions, and fewer certainty and hesitation words.   
     
  • Boardroom Centrality and Stock Returns (April 2012)
    David F. Larcker, Eric C. So, and Charles C. Y. Wang 
    Firms central in the interlocking boardroom network earn superior risk-adjusted stock returns. Initiating a long position in the most central firms and a short position in the least central firms earns an average risk-adjusted return of 4.68% per year. Firms with central boards also experience higher future growth in return-on-assets (ROA) with analysts failing to fully reflect this information in their earnings forecasts. Together, results suggest that board of director networks provide economic benefits that are not immediately reflected in stock prices. 
     
  • The Efficacy of Shareholder Voting: Evidence from Equity Compensation Plans (March 2012) 
    Chris Armstrong, Ian D. Gow, David F. Larcker; Rock Center for Corporate Governance at Stanford University Working Paper No. 112
    This study finds little evidence that either lower shareholder voting support for, or outright rejection of, proposed equity compensation plans leads to decreases in the level or composition of future CEO incentive-compensation. Thus, recent regulatory efforts aimed at strengthening shareholder voting rights, particularly in the context of executive compensation, may have limited effect on firms’ compensation policies. 
     
  • Market Making Under the Proposed Volcker Rule (January 16, 2012)  
    Darrell Duffie; Rock Center for Corporate Governance at Stanford University Working Paper No. 106 
    This paper discusses implications for the quality and safety of financial markets of proposed rules implementing the market-making provisions of section 13 of the Bank Holding Company Act, commonly known as the “Volcker Rule. 

  • Failure is an Option: Failure Barriers and New Firm Performance (February 7, 2012) 
    Robert Eberhart, Charles E. Eesley, and Kathleen M. Eisenhardt 
    Rock Center for Corporate Governance at Stanford University Working Paper No. 111 
    Do bankruptcy changes in the institutional environment affect the rate of founding by particular types of founders and the performance of their ventures? Researchers argue that lowered costs of exit may have attracted individuals with greater human capital and social networks thus positively affecting new firm performance among other findings.

  • CEO Preferences and Acquisitions (December 2011)
    Dirk Jenter and Katharina Lewellen
    Mergers frequently force target CEOs to retire early, and CEOs’ private merger costs are the forgone benefits of staying employed until the planned retirement date. Using retirement age as an instrument for CEOs’ private merger costs, we find strong evidence that target CEO preferences affect merger patterns. The likelihood of receiving a takeover bid increases sharply when target CEOs reach age 65. 
     
  • Proxy Advisory Firms and Stock Option Exchanges (Revision: August 2011)
    David F. Larcker, Allan L. McCall and Gaizka Ormazabal
    Using a comprehensive sample of stock option exchanges announced between 2004 and 2009, researchers find that firms that adopt exchanges that follow the restrictive proxy advisory firm policies (e.g., ISS) exhibit statistically lower market reaction at the announcement of this transaction, lower future operating performance, and higher executive turnover. These results are consistent with the conclusion that the recommendations of proxy advisory firms on stock option exchanges are not value increasing for shareholders.
     
  • Policy Issues in the Design of Tri-Party Repo Markets (Revision: July 2011)
    Darrell Duffie, Adam Copeland, Antoine Martin, and Susan McLaughlin
    This paper provides an overview of the nature and impetus of reforms to the U.S. tri-party repo market, one of the most critical components of the financial system. Authors review some key systemic weaknesses of this market that were revealed during the financial crisis of 2007-2009. 
     
  • Systemic Risk Exposures: A 10-by-10-by-10 Approach (July 2011)
    Darrell Duffie; National Bureau of Economic Research, Systemic Risk Measurement Initiative
    Presents and discusses a “10-by-10-by-10” network-based approach to monitoring systemic financial risk. Under this approach, a regulator would analyze the exposures of a core group of systemically important financial firms to a list of stressful scenarios, say 10 in number. 
     
  • Jordan M. Barry and John William Hatfield
    University of Pennsylvania Law Review, Forthcoming
    Corporate takeover defenses have long been a focal point of academic and popular attention. However, no consensus exists on such fundamental questions as why different corporations adopt varying levels of defenses and whether defenses benefit or harm target corporations' shareholders or society generally. Findings have implications for the longstanding debate about who is best served by state-level control of corporate law and the desirability of increased federal involvement in corporate law.

  • Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is not Expensive
    First Draft August 27, 2010; This draft March 23, 2011
    Anat R. Admati, Peter M. DeMarzo, Martin F. Hellwig,and Paul C. Pfleiderer
    Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy.
     
  • Managerial Incentives and Value Creation: Evidence from Private Equity (November 2009)
    Paul Oyer and Phillip Leslie 
    Paper analyzes the differences between companies owned by private equity (PE) investors and similar public companies. Researchers document that PE-owned companies provide higher managerial incentives to their top management: CEOs have almost twice as much equity, 10% lower salary, and more cash compensation than their counterparts at comparable public corporations. 
     
  • Performance-induced CEO Turnover (February 2010) 
    Dirk Jenter and Katharina Lewellen
    We revisit the empirical relation between CEO turnover and firm performance. We find that boards aggressively fire CEOs for poor performance, and that the turnover-performance sensitivity increases substantially with board quality.  The turnover-performance spreads remain high for seasoned CEOs in tenure years six to ten, but diminish considerably for the most seasoned CEOs. Our results, based on a new empirical approach, are significantly stronger than in prior research, and show that the threat of performance-induced dismissal is an important source of incentives for most CEOs. 
     
  • Research Underpins SEC Scrutiny of Scheduled Insider Trades
    Stanford GSB News, July 2009 
    In the wake of alleged misconduct by executives at Countrywide Savings, Novatel, and Qwest, research by former Stanford accounting professor Alan Jagolinzer, may be prompting the Securities and Exchange Commission to rethink rules that permit scheduled trading by insiders.

  •  Does a Central Clearing Counterparty Reduce Counterparty Risk? (April 27, 2011)
     Darrell Duffie and Haoxiang Zhu;  Rock Center for Corporate Governance at Stanford University Working Paper No. 46 
     Stanford University Graduate School of Business Research Paper No. 2022 
    --A Central Clearing House Doesn't Reduce CDS Risk, Stanford GSB News, April 2009 
    A plan by global financial regulators to fix the mess created by the misuse of credit default swaps is flawed, says Darrell Duffie, professor of finance at the Stanford Graduate School of Business.  

  • Managerial Contracting and Corporate Social Responsibility  (September 1, 2006)
    David P. Baron, Stanford GSB Research Paper No. 1945; Rock Center for Corporate Governance Working Paper No. 20 
    This paper presents a positive theory of corporate social responsibility set in a managerial capitalism context in which managers instead of markets allocate resources, including social expenditures.