Forthcoming Articles

How Does Forced CEO Turnover Experience Affect Directors?

Jesse Ellis, Lixiong Guo, and Shawn Mobbs

We study changes in independent director behavior and labor market outcomes after experiencing a forced CEO turnover. We find they are more willing to fire CEOs of underperforming firms, hire outside CEOs after a firing and encourage better board meeting attendance by fellow directors. We also find that shareholders of poorly performing firms react positively when experienced directors join the board. It does come with a small cost for directors, in terms of additional directorships, though the cost is not as great as that for directors who do not fire the CEO of a poorly performing firm.

Do Analysts and Their Employers Value Access to Management? Evidence from Earnings Conference Call Participation

Ling Cen, Jing Chen, Sudipto Dasgupta, and Vanitha Ragunathan

The literature examining analyst activity assumes that access to management is valued by analysts and their employers. We propose a readily observable measure of access: how often an analyst is invited to be among the first to ask questions in the Q&A session of an earnings conference call. These “early participants” are more successful in the labor market than peers from the same brokerage when their brokerages close. Our results show that access is valued by both sell-side and buy-side employers and reflects connectivity to management as well as dimensions of analyst skill not captured in traditional measures of performance.

Granularity of Corporate Debt

Jaewon Choi, Dirk Hackbarth, and Josef Zechner

We study the extent to which firms spread out their debt maturity dates, and refer to it as “granularity of corporate debt.” Guided by a model with rollover frictions we document based on a large sample of corporate bond issuers that maturities are more dispersed for larger and more mature firms, for firms with better investment opportunities, with higher leverage, and with lower profitability. During the recent financial crisis firms with valuable investment opportunities implemented more dispersed maturity structures. Finally, firms manage granularity actively and adjust toward target levels.

Debtholder Monitoring Incentives and Bank Earnings Opacity

Piotr Danisewicz, Danny McGowan, Enrico Onali, and Klaus Schaeck

We exploit exogenous legislative changes that alter the priority structure of different classes of debt to study how debtholder monitoring incentives affect bank earnings opacity. We present novel evidence that exposing nondepositors to greater losses in bankruptcy reduces earnings opacity, especially for banks with larger shares of nondeposit funding, listed banks, and independent banks. The reduction in earnings opacity is driven by a lower propensity to overstate earnings and is more pronounced among larger banks, and in banks with larger real estate loan exposure. Our findings highlight the importance of creditors’ monitoring incentives in improving the quality of information disclosure.

Internal Labor Markets, Wage Convergence, and Investment

Rui C. Silva

I document wage convergence in conglomerates using detailed plant-level data: workers in low-wage industries collect higher-than-industry wages when the diversified firm also operates in high-wage industries. I confirm this effect by exploiting the implementation of NAFTA and changes in minimum wages at the state-level as sources of exogenous increases in wages in some plants. I then track the evolution of wages of the remaining workers of the firm, relative to workers of unaffiliated plants. Plants where workers collect higher-than-industry wages operate with higher capital intensity, suggesting that internal labor markets may affect investment decisions in internal capital markets.

Safe Asset Shortages: Evidence from the European Government Bond Lending Market

Reena Aggarwal, Jennie Bai, and Luc Laeven

We identify the unique role of the government bond lending market in collateral transformation during periods of market stress. Using a novel database, we provide evidence that safe assets in the lending market have higher demand, higher borrowing cost, and higher usage of non-cash collateral relative to non-safe assets during stressed market conditions. Moreover, we find that market participants are able to obtain safe assets using relatively low-quality non-cash collateral, allowing for collateral transformation. We show that policy interventions by central banks can help reduce safe asset shortages by returning sought-after safe assets to the market.

Dynamics of Arbitrage

Louis H. Ederington, Chitru S. Fernando, Kateryna V. Holland, Thomas K. Lee, and Scott C. Linn

We study the dynamics of cash-and-carry arbitrage using the U.S. crude oil market. Sizable arbitrage-related inventory movements occur at the NYMEX futures contract delivery point but not at other storage locations where, instead, operational factors explain most inventory changes. We add to the Theory of Storage literature by introducing two new features. First, due to arbitrageurs contracting ahead, inventories respond to not only contemporaneous but also lagged futures spreads. Second, storage capacity limits can impede cash-and-carry arbitrage, leading to the persistence of unexploited arbitrage opportunities. Our findings suggest that arbitrage-induced inventory movements are, on average, price stabilizing.

Economic Policy Uncertainty and Self-Control: Evidence from Unhealthy Choices

Ivalina Kalcheva, Ping McLemore, and Richard Sias

We hypothesize that greater economic policy uncertainty (EPU) leads to increases in unhealthy behaviors by lowering individuals’ impulse control. Based on 6.1 million interviews over 22 years, our analyses reveal a positive relation between EPU and the propensity to make poor lifestyle choices including higher rates of alcohol consumption, a larger number of drinks consumed, and more binge drinking. EPU has long-lasting effects on drinking behavior, consistent with habit formation. Moreover, the relation is stronger for younger individuals whose habits are more malleable. We find similar results when using smoking rates to measure unhealthy choices.

1 2 3 15