Firms often broadcast commitments to environmental, social, and governance (ESG) practices, but do these commitments reflect their internal practices? To find out, I introduce an inside measure of ESG practices from 10 million employee reviews via a word-embedding model. The measure predicts a...

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...

While there is widespread concern that target CEO retention by a private equity acquirer can result in a lower premium for target shareholders because of the potential conflict of interest of the CEO, it is also possible that target shareholders could benefit from CEO retention because it can...

A manager's shareholders, board of directors, and potential future employers are continually assessing his ability. A rich literature has documented that this insight has profound implications for corporate governance because assessment generates incentives (good and bad), introduces assorted...

Uncertainty about management appears to affect firms' cost of borrowing and financial policies. In a sample of S&P 1500 firms between 1987 and 2010, CDS spreads, loan spreads and bond yield spreads all decline over the first three years of CEO tenure, holding other macroeconomic, firm, and...

Influenced by their compensation plans, CEOs make their own luck through decisions that affect future firm risk. After adopting a relative performance evaluation (RPE) plan, total and idiosyncratic risk are higher, and the correlation between firm and industry performance is lower. The opposite...

Management risk occurs because uncertainty about future managerial decisions increases a firm's overall risk. This paper documents the importance of management risk in determining firms' cost of borrowing. CDS spreads, loan spreads and bond yield spreads all increase at the time of CEO turnover,...

What makes independent directors perform their monitoring duty? One possible reason is that they are concerned about being sanctioned by regulators if they do not monitor sufficiently well. Using unique features of the Chinese financial market, we estimate the extent to which independent...

Panel OLS and GMM-IV estimates indicate that executives respond to the adoption of a compensation clawback provision by decreasing firm risk. The mechanisms that transmit incentives to decisions and decisions to risk appear to be more conservative investment and financial policies and preemptive...

We examine the labor market consequences for directors who adopt poison pills. Directors who become associated with pill adoption experience significant decreases in vote margins and increases in termination rates across all their directorships. They also experience a decrease in the likelihood...