Entries by Alex Edmans

How Corporate Credit Ratings Induce Short-Termism

Credit rating agencies were under particular scrutiny in the recent financial crisis, as critics argue they gave too high ratings to securities that turned out to be toxic. One potential culprit is the “issuer-pays” model, where it is the company being rated that pays for credit ratings, which may encourage rating agencies to be overly-generous […]

Reforming CEO Pay – The Dangers of Short-Term Incentives

(This post originally appeared on LinkedIn) Executive pay is a high-profile topic about which almost everyone has an opinion. Many shareholders, workers, and politicians believe that the entire system is broken and requires a substantial overhaul. But, despite being well-intentioned, their suggested reforms may not be targeting the elements of pay that are most critical for […]

Time Management Tips to Boost Your Productivity

(A shorter version of this article was originally published in CityAM. A talk on time management and personal leadership is here.) At work, often the last thing you can do is work.  Emails flood in, colleagues make urgent requests, and fires need to be fought.  But, a few pointers can help us get the most out of each day. […]

Underperformance of Companies Holding Meetings in Remote Locations

If a company has bad news that it wishes to hide, where will it hold its shareholder meeting? As far away as possible! That’s the hypothesis of an ingenious paper entitled “Evasive Shareholder Meetings”, by Yuanzhi Li (Temple) and David Yermack (NYU Stern) that I saw at the Rotterdam Workshop on Executive Compensation and Corporate Governance yesterday. […]

Profiting from momentum strategies – Part 2

The previous post concerned momentum – a strategy of buying past winners and selling past losers. It discussed how this strategy does well on average, but on rare occasions (recent market downturns and high market volatility) does very poorly. Another reason why momentum may perform poorly is because other investors are chasing the same strategy. One of […]

Profiting from momentum strategies – Part 1

Momentum is arguably the most well-known trading strategy. A simple strategy of buying stocks that have done well over the past 6 months (“winners”), and shorting stocks that have done badly (“losers”), earns a 1%/month return over the next 6 months. While other trading strategies stop being profitable once they have been discovered (because investors start exploiting […]

Does corporate social responsibility improve firm value?

Below is an article I wrote two months ago for the World Economic Forum. Since it’s posted on the password-protected section of the WEF website, I reproduce it here. Does corporate social responsibility (“CSR”) improve firm value? When companies make decisions, should they care only about shareholders or should they take other stakeholders (e.g. employees, […]