Jan 18: The Long-Term Consequences of Short-Term Incentives. Vesting equity is associated with a higher likelihood of M&A and share repurchases, and higher short-term returns but lower long-term returns to these actions.
Oct 17: The Source of Information in Prices and Investment-Price Sensitivity published in the Journal of Financial Economics. Managers learn from prices to guide their investment decisions – financial markets matter for the real economy. But value of financial markets depends not on the total amount of information in prices, but where this information comes from.
July 17: Executive Compensation: A Survey of Theory and Evidence. New survey paper on executive compensation, containing (1) Data on CEO and other top executive pay over time and across firms, including private firms and non-US firms. (2) Critical analysis of three explanations for the drivers of pay: shareholder value maximization (including a simple unifying model), rent extraction, institutional influences. (3) The “effects” of executive pay and challenges in causal identification. (4) Directions for future research.
July 17: Blockholders: A Survey of Theory and Evidence. Survey paper for the Handbook of the Economics of Corporate Governance on: underlying property rights of public firms and role of blockholders; definition of a blockholder; new evidence on frequency and characteristics of blockholders; simple model unifying theories of voice and exit; review of empirical studies; future research directions.
July 17: Does Improved Information Improve Incentives? forthcoming in the Journal of Financial Economics. Optimal contracting model showing that improved precision of the performance measure may reduce the agent’s incentives, offsetting the benefits of information typically documented in the literature.
July 17: Equity Vesting and Investment published in the Review of Financial Studies. CEOs cut investment when their equity vests, due to concerns with the short-term stock price.
Stewardship Must Be Embedded Across the Investment Chain (Financial Times)
The Case for Stock Buybacks (Harvard Business Review)
The Answer to Short-Termism Isn’t Asking Investors to Be Patient (Harvard Business Review)
Response to government’s Green Paper on Corporate Governance
Response to government’s Green Paper on Industrial Strategy
Written evidence on CEO pay, workers on boards, shareholder vs. stakeholder maximisation
Supplementary written evidence: short-term trading, dividends and repurchases are not bad for society; further evidence on workers on boards
Simplicity, Transparency, and Sustainability: A New Model for CEO Pay. (Many elements are recommended by House of Commons Select Committee on Corporate Governance and UK Government’s Green Paper on Corporate Governance Reform)
Compilation of non-technical, practitioner article on executive pay
Letter to SEC on why they should not force pay ratio disclosure
When CEO’s Equity Is About to Vest, They Cut Investment to Boost the Stock Price (Harvard Business Review)
Why Elon Musk’s Compensation Plan Wouldn’t Work For Most Executives (Harvard Business Review)
Why We Need to Stop Obsessing Over CEO Pay Ratios (Harvard Business Review)
Stop Making CEO Pay A Political Issue (Harvard Business Review)
Performance-Based Pay For Executives Still Works (Harvard Business Review)
FRC Stewardship Code: Thoughts for change.