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We study the effects of institutionalization on fund manager compensation and asset prices. Institutionalization raises the performance-sensitive component of the equilibrium contract, which makes institutional investors effectively more risk averse. Institutionalization affects market outcomes...
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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...
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When there is uncertainty about a CEO's quality, news about the firm causes rational investors to update their expectation of the firm's profitability for two reasons: Updates occur because of the direct effect of the news, and also because the news can cause an updated assessment of the CEO's...
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