Alex Edmans

Sept 23: New paper, Does the Carbon Premium Reflect Risk or Mispricing? Companies with higher carbon emissions enjoy higher earnings surprises; earnings announcement returns account for 30-50% of the carbon premium. The carbon premium may result from outperformance (companies can “get away with” emitting) rather than a higher cost of capital.

Sept 23: CEO Compensation: Evidence From the Field published in Journal of Financial Economics. We survey directors and investors on how they set CEO pay in practice, revealing a number of departures from mainstream academic models. Incentives are used to fairly reward performance ex-post, rather than incentivize effort ex ante.

Sept 23: Applying Economics – Not Gut Feel – To ESG published in Financial Analysts Journal. ESG is no different from any other investment that generates financial and social value. Thus, we can apply decades of academic research on corporate finance, asset pricing, and welfare economics to ESG issues rather than shooting from the hip.

Apr 23: New paper, Diversity, Equity, and Inclusion. Perceptions of DEI by employees are unrelated to the standard measures of demographic diversity focused on by academics and practitioners. DEI is correlated with superior future accounting performance but demographic diversity is not.

Apr 23: Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around The World forthcoming in Management Science. Companies with high employee satisfaction outperform peer firms, but only in countries with high labor market flexibility. ESG strategies should take institutional context into account.

Mar 23: The End of ESG published in Financial Management. ESG is both very important and nothing special. It’s very important for long-term value, and thus relevant for everyone, not just ESG folks. It’s nothing special versus other drivers of value and shouldn’t be put on a pedestal.

Jan 23: Learnings From 1,000 Rejections. Common themes from rejection letters for nearly 1,000 manuscripts at the Review of Finance, which aim to provide guidance for future research.