We show that long-term compensation is associated with higher pay in the financial industry and the legal sector. Then, using a detailed survey of law school graduates, we explore why firms use long-term compensation. We find that individuals with jobs that make them highly visible and that...

We show that the local bias in US mutual fund portfolios varies significantly over time and is more pronounced at times of heightened market uncertainty, such as during financial crises. Similarly, local bias is less pronounced in periods when market sentiment is strong. These results do not...

Sweden offers a unique natural experiment to analyze the effects of institutionalized saving on the ownership structure, corporate governance, and firm performance. The Swedish pension reform increased the stock market participation of pension funds, causing a significant reshuffling in the...

We show that production networks are important for the transmission of unconventional monetary policy. We find that firms with bonds eligible for purchase under the European Central Bank's Corporate Sector Purchase Program act as financial intermediaries by extending more trade credit to their...

We relate trade credit to product characteristics and aspects of bank-firm relationships and document three main empirical regularities. First, the use of trade credit is associated with the nature of the transacted good. In particular, suppliers of differentiated products and services have...

We show that individuals residing in highly entrepreneurial neighborhoods are more likely to become entrepreneurs and invest more in their own businesses, even though their entrepreneurial profits are lower and their alternative job opportunities more attractive. These findings are robust to the...

We study the effects of investor protection on equilibrium stock prices, returns and portfolio allocation decisions. In our theoretical model, if investor protection is weak, wealthy investors have an incentive to become controlling shareholders. In equilibrium, the stock price reflects the...

Anecdotal evidence suggests that investor protection affects the demand for equity, but existing theories emphasize only the effect of investor protection on the supply of equity. We build a model showing that the demand for equity is important in explaining stock market development. If the...

We study whether the individual decision to become an entrepreneur, entrepreneurial profits and investment are affected by the decisions of other individuals belonging to the same social group. To overcome identification problems, we include local labor market fixed effects, social group fixed...

This paper analyzes workers' choices to sort in large and small firms. Workers care to realize their ideas as they share the associated benefits with the firm. Small firms being less capitalized are more inclined to realize their workers' risky ideas, but better capitalized firms provide safe...