When a CEO holds the title of Chairman of the Board, the board has the formal authority, but the CEO often holds the leadership. This paper shows that if the board is not independent enough to discipline a CEO, it is optimal for the board to take leadership by separating the titles. However, the board (or shareholders) is better-off if it can increase its independence without separating the tit...

The current regulatory environment is changing with regard to security settlement systems and central counterparty services. Various initiatives are addressing these changes, e.g. CESR/ESCB, Giovannini, CPSS/IOSCO, ISD, G30 and the European Commission’s Communication on Clearing and Settlement. In this paper, we do not want to resolve or comment on any of these issues, but believe it is of the ...

SYNOPSIS Extant literature demonstrates that whistleblowing is associated with changes in the target’s financial reporting. This paper provides compelling evidence also affects peer firms’ Specifically, we find industry peers reduce their reporting aggressiveness following a allegation. deterrent effect stronger when firm geographically closer to target, and target share board member, predicted...

We examine the interaction between risk (uncertainty) and production efficiency in determining pay-performance sensitivity in optimal executive compensation. Particularly, we show that the risk-incentive trade-off is exacerbated (attenuated) as production efficiency increases when the efficiency level is greater (less) than the level of compensation risk. This result suggests that the optimalit...

We examine the relationship between CEO ownership and stock market performance. Firms in which the CEO voluntarily holds a considerable share of outstanding stocks outperform the market by more than 10 percent p.a. after controlling for traditional risk factors. The effect is most pronounced in firms that are characterized by large managerial discretion of the CEO. The abnormal returns we docum...

G00–G09, Inflammatory diseases of the central nervous system G10–G14, Systemic atrophies primarily affecting the central nervous system G20–G26, Extrapyramidal and movement disorders G30–G32, Other degenerative diseases of the nervous system G35–G37, Demyelinating diseases of the central nervous system G40–G47, Episodic and paroxysmal disorders G50–G59, Nerve, nerve root, and plexus disorders G...

We develop a structural model to investigate the effects of asymmetric beliefs and agency conflicts on dynamic principal–agent relationships. Optimism has a first-order effect on incentives, investments, and output, which could reconcile the private equity puzzle. Asymmetric beliefs cause optimal contracts to have features consistent with observed venture capital and research and development (R...

We document evidence of corruption in Chinese state asset sales. These sales involved stakes in partially privatized firms, providing a benchmark—the price of publicly traded shares—to measure underpricing. Underpricing is correlated with deal attributes associated with misgovernance and corruption. Sales by “disguised” owners that misrepresent their state ownership to elude regulatory scrutiny...