We posit that limited transparency of firms' operations to outside investors increases demands on governance systems to alleviate moral hazard problems. We investigate how ownership concentration, directors' and executive's incentives, and board structure vary with: 1) earnings timeliness, and...

We develop an agency-based model that provides a direct theoretical connection between compensation-earnings sensitivities (CERCs) and value-earnings sensitivities (ERCs). The model predicts that CERCs are increasing in ERCs. This relation between valuation and stewardship derives from the fact...

An important, unresolved issue in finance is whether the sensitivity of capital investment to internally generated cash flows reflects the impact of binding financing constraints on firms' investment decisions. We contribute new insight to this debate by providing systematic evidence that...

This paper reviews and proposes additional research concerning the role of publicly reported financial accounting information in the governance processes of corporations. We first review and analyze research on the use of financial accounting measures in managerial incentive plans and explore...

We investigate hedge fund activism in the corporate bond market. The empirical setting we use is the active enforcement of bondholders' rights during 2003-07 triggered by issuers' violation of a standard bond covenant requiring timely financial reporting. Specifically, we examine differences in...

We examine how and why insider trading varies across senior executives and their firms. As predicted, the profitability of both purchases and sales are higher for “recordholder” executives (those who have a record of legal infractions), than for other “non-recordholder” executives at the...

We examine how and why insider trading varies across senior executives and their firms. As predicted, the profitability of both purchases and sales are higher for “recordholder” executives (those who have a record of legal infractions), than for other “non-recordholder” executives at the...

We study the role of individual CEOs in explaining corporate social responsibility (CSR) scores. We show that CEO fixed-effects explain 63% of the variation in CSR scores, a significant portion of which is attributable to a CEO's “materialism” (relatively high luxury asset ownership)....

We examine how executives' behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In...