The period 2007-2010 marked one of the most severe economic and financial crises in living memory. In this paper we focus on two of accounting's key functions within organizations and markets, financial reporting and governance. In this respect we find that accounting exhibited shortcomings in...

Prevailing executive pay practices rest on fallacious assumptions about performance attribution, the nature of alignment, and the psychology of incentives, and have numerous unintended consequences that are value-destructive particularly for long term and diversified shareholders. The focus of...

This paper examines the conditions under which CEOs are able to affect the timing and the price of the stock options they are granted at the time of their firm's IPO. Contrary to Lowry and Murphy (2007) who do not find a relationship between IPO grants and IPO underpricing, this paper finds such...

In this paper we examine intra-firm competition in the U.S. mutual fund industry. Our empirical study shows that fund managers within mutual fund families compete against other fund managers within the same fund family. They adjust the risk they take dependent on the relative position within...

In large part, the form of investment advisers' compensation contracts is imposed by the Securities and Exchange Commission. Given these contractual forms, this paper considers the portfolio choices that emerge when advisers rationally cultivate their reputations. In a two-period model of...

This paper examines the role of certain fair value accounting (FVA) outcomes in compensation of US bank CEOs. The use of FVA in compensation invites an agency cost ndash; the clawback problem - if cash compensation is based on unrealized profits that may reverse in the future. At the same time...

This paper examines the relation between the investment horizon of banks and their CEO compensation, and its consequences for risk and performance. We find that banks with short-term investment intensity pay more cash bonus, exhibit higher risk and perform more poorly than banks with longer-term...

Enterprise risk management (ERM) is a management approach that holistically manages risks across the organization. In this paper we examine the characteristics of firms that adopt ERM. Our results support the hypothesis that firms adopt ERM for direct economic benefit rather than to merely...

This article characterizes the properties of the compensation scheme of delegated portfolio management that would lead to the selection of high risk-high return portfolios. In particular, it provides conditions under which a non-monotone payment structure emerges as an optimal contract, which...