Motivated by agency theory, we explore how independent directors view managerial risk-taking incentives using a natural experiment. We exploit the passage of the Sarbanes-Oxley Act as an exogenous shock that raised board independence. Our difference-in-difference estimates show that independent...

Earnings play a vital role in portraying a company's economic health. Hence, executives have incentives to manage earnings. Motivated by Degeorge et al. (1999) and Burgstahler and Dichev (1997), this study applies the behavioral framework developed by Degeorge et al. (1999) to investigate...

Motivated by agency theory, this study attempts to ascertain whether chief executive compensation is influenced by legal rules. In particular, we analyze whether Delaware law has an impact on CEO pay. Legal rules have been argued to impact agency conflicts. Agency costs, in turn, affect CEO...

We explore the role of powerful CEOs on the extent of risk-taking, using Bebchuk, Cremers, and Peyer's (2011) CEO pay slice (CPS). Based on more than 12,000 observations over 20 years (1992-2012), our results reveal a non-monotonic association. In particular, relatively less powerful CEOs...