These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.
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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Measuring Skill in the Mutual Fund Industry
Using the value that a mutual fund extracts from capital markets as the measure of skill, we find that the average mutual fund has used this skill to generate about $3.2 million per year. We document large cross-sectional differences in skill…
The Information Content of Insider Trades around Government Intervention during the Financial Crisis
This paper examines whether insiders at leading financial institutions anticipated the effect of government intervention during the Financial Crisis on their firms’ share prices. While we find no evidence that insiders anticipated the Crisis, we…
Organizational Knowledge and Technological Change
It is known that organizations benefit from stability, but that they often are compelled to change by circumstances. We argue that the relationship between organizational stability and change hinges on a key…
Equity Recourse Notes: Creating Counter-cyclical Bank Capital
We propose a new form of hybrid capital for banks, Equity Recourse Notes (ERNs), which ameliorate booms and bust by creating counter-cyclical incentives for banks to raise capital, and so encourage bank lending in bad times. They avoid the…
The Cost of Constraints: Risk Management, Agency Theory and Asset Prices
Traditional academic literature has relied on so-called “limits to arbitrage” theories to explain why investment managers are unable to eliminate the effects of investor “irrational” preferences (either the asset-pricing anomalies or the…
Search Based Peer Firms: Aggregating Investor Perceptions through Internet Co-Searches
Applying a “co-search” algorithm to Internet traffic at the SEC’s EDGAR website, we develop a novel method for identifying economically-related peer firms. Our results show that firms appearing in chronologically adjacent searches by the same…
Failure is an Option: Failure Barriers and New Firm Performance
This study investigates the affect on new venture performance after a regulatory change that motivated the entry of more elite founders because bankruptcy consequences were moderated. Prior research on policy efforts to stimulate entrepreneurship…
An Evolutionary Risk Basis for the Differential Treatment of Gains and Losses
This study endogenously generates the asymmetric verification concept of conservatism, using evolutionary biology as a foundation. A producer produces (or hunts) a consumable with a stochastic production technology,…
Outsourcing Shareholder Voting to Proxy Advisory Firms
Forthcoming in the Journal of Law and Economics.
This paper examines changes in executive compensation programs made by firms in response to proxy advisory firm say-on-pay voting policies. Using proprietary models, proxy advisory…
Conflicting Social Codes and Organizations: Hygiene and Authenticity in Consumer Evaluations of Restaurants
Organization theory highlights the spread of norms of rationality in contemporary life. Yet rationality does not always spread without friction; individuals often act based on other beliefs and norms. We explore this problem in the context of…
The Strategic Timing of Management Earnings Forecasts Around Scheduled Releases of Macroeconomic News
The Effect of Repatriation Tax Costs on U.S. Multinational Investment
This paper investigates whether the U.S. repatriation tax for U.S. multinational corporations (MNCs) affects foreign investment. Prior research shows that repatriation tax costs are positively associated with cash overseas, but the use of such…
Aggregate Investment and Investor Sentiment
Using bottom-up information gleaned from corporate financial statements, we examine the relation between aggregate investment, future equity returns, and investor sentiment. Consistent with the business cycle literature, corporate investments…
Peaches, Lemons, and Cookies: Designing Auction Markets with Dispersed Information
This paper studies the role of ex-ante information asymmetries in second price, common value auctions. Motivated by information structures that arise commonly in applications such as online advertising, we seek to understand what types of…
Choosing a Good Toolkit: An Essay in Behavioral Economics
Networks of Military Alliances, Wars, and International Trade
We investigate the role of networks of military alliances in preventing or encouraging wars between groups of countries. A country is vulnerable to attack if some allied group of countries can defeat the defending country and its (remaining)…
Moral Hazard and Long-Run Incentives
This paper considers dynamic moral hazard settings, in which the agent’s actions have consequences in the future. To maintain incentives, the optimal contract ties deferred compensation and termination to future performance. Some of the…
An Exploratory Investigation of the Determinants and Ratings Implications of Performance Appraisal Plan Characteristics
Performance appraisal is one of the cornerstones of management control systems. Although this topic has been the subject of considerable prior research, most of this work is based on a single observation per firm or performance appraisal…
Optimal Bailouts Under Partially Centralized Bank Supervision
This paper examines the optimal degree of centralization that can be achieved with respect to bailout policies when a central authority cannot supervise the entire banking system of the economy. Part of the banking system is supervised by a local…
Capital Structure and Systematic Risk
Systematic risk is an important determinant of corporate capital structure. A one standard deviation increase in asset beta corresponds to a decrease in leverage of 13%, controlling for total asset volatility. This evidence is consistent with…