When there is uncertainty about a CEO's quality, news about the firm causes rational investors to update their expectation of the firm's value for two reasons: Updates occur because of the direct effect of the news, and also because news leads investors to update their assessment of the CEO's...

This paper documents the existence of a CEO Investment Cycle, in which disinvestment decreases over CEO tenure while investment increases, leading to “cyclical” firm growth in assets as well as in employment. The estimated variation in investment rate over the CEO cycle is of the same order...

We study a model in which future financing constraints leas firms to have a preference for investments with sorter payback periods, investments with less risk, and investments that utilize more pledgeable assets. The model also shows how investment distortions towards more liquid, safer assets...