Working Papers

We study how competition for talent affects CEO compensation, taking into consideration that CEO decisions and CEO skills or talent are not observable, and CEOs can manipulate performance as measured by outsiders. Firms compete by offering…

We study the interplay between financial covenants and the operational decisions of a retailer that obtains financing through a secured, inventory-based lending contract. We characterize how leverage affects dynamic inventory decisions, and…

We discuss “Mandatory IFRS Reporting and Changes in Enforcement” by Christensen, Hail, and Leuz (CHL, 2013). We begin by discussing CHL in the context of prior literature, and subsequently discuss the research design, results, and inferences. CHL…

This paper examines a life-cycle cost concept that applies to both manufacturing and service industries in which upfront capacity investments are essential. Borrowing from the energy literature, we refer to this cost measure as the levelized…

No abstract available.

An important characteristic of most renewable energy sources is their intermittent pattern of electricity generation. Yet, intermittency is usually ignored in life-cycle cost calculations intended to assess the competitiveness of electric power…

This study determines whether voluntary adoption of IFRS is associated with increased comparability of accounting amounts and attendant capital market benefits. After “adopting” firms voluntarily adopt IFRS, their accounting amounts become…

The relation between aggregate earnings and aggregate returns is complex and not fully understood. For example, in contrast to firm-level relations, prior literature finds aggregate earnings changes and aggregate stock returns are negatively…

We study a dynamic model of earnings quality and earnings management in which firms take into account both long- and short-term considerations when reporting earnings. In addition to providing predictions about time series properties of earnings…

This paper studies the joint effect of conservatism and aggregation on the cost of equity capital and the efficiency of debt contracts. In the model, a firm’s two assets are valued at either the lower-of-cost-or-market or fair value and the…

Firm disclosures often reach only a portion of investors, which results in information asymmetry among investors, and therefore lower market liquidity. This issue is particularly salient for firms that are not highly visible, as they tend not to…

Many have argued that financial statements created under an accounting model that measures financial instruments at fair value would not fairly represent a banks business model. In this study we examine whether financial statements using fair…

This study examines the effects of shareholder support for equity compensation plans on subsequent chief executive officer (CEO) compensation. Using cross-sectional regression, instrumental variable, and regression discontinuity research designs…

Prior research argues that a manager whose wealth is more sensitive to changes in the firms stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk,…

Under Rate-of-Return regulation, a firm’s product prices are constrained by the requirement that investors do not earn more an allowable return on the firm’s assets. This paper examines the dynamic properties of the Rate-of-Return regulation…

This paper examines the relationship between firm performance and the recommendations provided by Institutional Shareholder Services (ISS), the largest proxy advisory firm in the United States, regarding shareholder votes in stock option exchange…

This study examines the use of performance-based incentives for internal monitors (general counsel and chief internal auditor) and whether these incentives impair monitors independence by aligning their interests with the interests of those being…