We study whether the effectiveness of corporate governance mechanisms varies depending on the characteristics of the executives subject to these mechanisms - namely, their “psychological type”, as proxied by their history of legal infractions. In particular, we examine insider trading, where...

Using micro data on managerial expenditures, we uncover heuristics in capital budgets, such as nominal rigidity, anchoring, and sharp reset deadlines. Such heuristics engender managerial opportunism and erode investment efficiency. Managers with a budget surplus increase investment sharply...

Under a powerful narrative, Wall Street and its obsession with short-term profits are one of the main reasons why corporations—and by extension our economic system—are failing society. In Missing the Target: Why Stock-Market Short-Termism Is Not the Problem, Professor Mark Roe challenges...

We examine CEO partisanship and the speed of adjustment to target leverage ratios. Republicans, who prior literature views as risk-averse, are expected to move more aggressively to their targets when over-levered and more slowly when under-levered. However, Republicans’ dislike of taxes...

In this paper we investigate the relationship between firm-specific investor sentiment, measured by applying text analysis to news stories published by Thomson Reuters, and merger and acquisition (M&A) deals announced by US-listed companies between 1997 and 2018. We find that a more positive...

A key objective of shareholder activists is to persuade a firm’s management to change its strategy. CFOs play an important role in negotiations, nonetheless activism research mainly focuses on CEOs. We examine the relationship between CFO overconfidence and the likelihood to get targeted by...

The notion of stock-market-driven short-termism relentlessly whittling away at the American economy’s foundations is widely accepted and highly salient. Presidential candidates state as much. Senators introduce bills assuming as much. Corporate interests argue as much to the Securities and...

Based on the perspective of the industry peer effect, this paper explains the imitation motivation and internal mechanism of listed companies in implementing employee stock ownership plans, and conducts an empirical test based on the data of listed companies in China from 2014 to 2019. From our...

We investigate the effect of CEO relative age, an early-life measure defined as age relative to others in the same school cohort determined by the cutoff date policy at primary school entry, on corporate risk-taking. We base our analysis on the arguable randomness of managers’ birth months and...

This paper examines the hypothesis that religious firms are more socially responsible. By utilizing a novel measure of religiosity that reflects firm-level adherence to Christian values, we find that religiousness is positively associated with the CSR engagement of large U.S. firms after...