This paper analyzes board independence and competence as distinct, but inextricably linked aspects of board effectiveness. Competent directors add shareholder value because they have better information about the quality of projects. While a CEO cares about shareholder value, he also wants his...

We argue that incentives to take equity risk ("equity incentives") only partially capture incentives to take asset risk ("asset incentives"). This is because leverage, while central to the theory of risk shifting, is not explicitly considered by equity incentives. Employing measures of asset...

We establish that CEOs of companies experiencing volatile industry conditions are more likely to be dismissed. At the same time, industry risk is, accounting for various other factors, unlikely to be associated with CEO compensation other than through dismissal risk. Using this identification...

We study the shareholder value implications of a shift in the corporate balance of power towards shareholders. We find that in response to an unanticipated event that made it likely that an annual binding shareholder vote on management pay would become compulsory for Swiss public companies, the...

Extant research shows that CEO characteristics affect earnings management. This paper studies how investors infer a specific characteristic of CEOs, namely moral commitment to honesty, from earnings management and how this perception - in conjunction with their own social and moral preferences -...

We establish that CEOs of companies experiencing volatile industry conditions are more likely tobe dismissed. At the same time, industry risk is, controlling for various other factors, unlikelyto be directly associated with CEO compensation other than through dismissal risk. Using...