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SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB the Rock Center.
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Boardroom Centrality and Stock Returns
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…
Corporate Governance, Compensation Consultants, and CEO Pay Levels
This study investigates the relation between corporate governance and CEO pay levels, and the extent to which the higher pay found in firms using compensation consultants is related to governance differences. Using proxy statement disclosures…
Detecting Deceptive Discussions in Conference Calls
We estimate classification models of deceptive discussions during quarterly earnings conference calls. Using data on subsequent financial restatements (and a set of criteria to identify especially serious accounting problems), we label the…
Endogenous Selection and Moral Hazard In Compensation Contracts
The two major paradigms in the theoretical agency literature are moral hazard (i.e., hidden action) and adverse selection (i.e., hidden information). Prior research typically solves these problems in isolation, as opposed to simultaneously…
Non-GAAP and Street Earnings: Evidence from SFAS 123R
This study examines how key market participantsmanagers and analystsresponded to SFAS 123Rs controversial requirement that firms recognize stock-based compensation expense. Despite mandated recognition of the expense, some firms managers exclude…
Stability Properties of the Rate-of-Return Regulation Process
This note provides the proof of proposition 5 in our paper titled “Dynamics of Rate-of-Return Regulation.”
The Market Reaction to Corporate Governance Regulation
This paper investigates the market reaction to recent legislative and regulatory actions pertaining to corporate governance. The managerial power view of governance suggests that executive pay, the existing process of proxy access, and various…
Carbon Capture by Fossil Fuel Power Plants: An Economic Analysis
For fossil fuel power plants to be built in the future, carbon capture and storage (CCS) technologies offer the potential for significant reductions in CO₂ emissions. We examine the break-even value for CCS adoptions, that is, the critical value…
The Incentives for Tax Planning
Recent research argues that differences in the structure of top executive compensation plans and/or corporate culture explain cross-sectional variation in tax avoidance. However, this research does not link tax planning to the incentives of the…
The Stock Market's Pricing of Customer Satisfaction
A number of recent marketing studies examine the stock markets response to the release of American Customer Satisfaction Index (ACSI) scores. The broad purpose of these studies is to investigate the stock markets valuation of customer…
Cost of Capital and Earnings Transparency
We provide evidence that firms with more transparent earnings enjoy a lower cost of capital. We develop an earnings transparency measure that captures cross-sectional and intertemporal variation in the extent to which earnings and change in…
International Accounting Standards and Accounting Quality
We examine whether application of International Accounting Standards is associated with higher accounting quality. The application of IAS reflects the combined effects of features of the financial reporting system, including standards, their…
Differential Properties in the Ratings of Certified vs. Non-Certified Bond Rating Agencies
We examine whether the properties of bond ratings from certified agencies (designated by the SEC) differ from those of non-certified bond rating agencies. Bond ratings from non-certified agencies are used solely for investment advice. Certified…
Conservatism, Growth, and Return on Investment
Return on Investment (ROI) is widely regarded as a key measure of firm profitability. The accounting literature has long recognized that ROI will generally not reflect economic profitability, as determined by the internal rate of return (IRR) of…
Market Reaction to Events Surrounding the Adoption of IFRS in Europe
This paper examines the European stock market reaction to key events predicted to affect the adoption of International Financial Reporting Standards (IFRS) in Europe, including adoption of the controversial standard on financial instruments, IAS…
Stock Price, Earnings and Book Value in Managerial Performance Measures
This paper develops a multiperiod principal-agent model in which a manager must be given incentives to undertake investments and to exert personally costly effort. Investments are soft (e.g., intangible assets) and therefore entail measurement…
Analyst Earnings Forecast Revisions and the Pricing of Accruals
We investigate the relation between two market anomalies to provide insights into analysts role as information intermediaries. Prior research finds that accruals and analyst earnings forecast revisions predict future returns. We find that the…
External and Internal Pricing in Multidivisional Firms
Multidivisional firms frequently rely on external market prices in order to value internal transactions across profit centers. This paper examines market-based transfer pricing when an upstream division has monopoly power in selling a proprietary…
Firms' Voluntary Recognition of Stock-Based Compensation Expense
This study investigates factors associated with firms decisions in 2002 and early 2003 to recognize stock-based compensation expense under Statement of Financial Accounting Standards (SFAS) No. 123. We find that the likelihood of SFAS 123 expense…
SFAS 123 Stock-Based Compensation Expense and Equity Market Values
This study investigates the relation between share price and stock-based compensation expense that is disclosed but not recognized under SFAS 123, after controlling for net income, equity book value, and expected earnings growth. Our instrumental…