This paper studies incentives in a dynamic contracting framework of a levered firm. In particular, the manager selects long-term and short-term efforts, while shareholders choose initially optimal leverage and ex-post optimal default policies....Read more
In this paper, we first shed light on the factors that underlie the differences between the ?shareholder wealth maximization? and the ?long-term commitment? models of corporate governance. By introducing a third type of governance model, we show...Read more
This paper links the impending vesting of CEO equity to reductions in real investment. Existing studies measure the manager?s short-term concerns using the sensitivity of his equity to the stock price. However, in myopia theories, the driver of...Read more
We present a model in which managers are risk-averse and firms compete for scarce managerial talent (?alpha?). When managers are not mobile across firms, firms provide efficient compensation, which allows for learning about managerial talent and...Read more
We show that following large permanent negative shocks, firms with more short-term institutional investors suffer smaller drops in sales, investment and employment and have better long-term performance than similar firms affected by the shocks....Read more
During the period 2007-2016, S&P 500 firms distributed to shareholders more than $4.2 trillion via stock buybacks and $2.8 trillion via dividends - $7 trillion in total. These shareholder payouts amounted to over 96% of the firms' net income...Read more
This paper looks at shareholder activism from the perspective of the revision of the EU Shareholder Rights Directive, which was approved by the European Parliament on 14 March 2017. The main findings are as follows.
First, the effective...Read more
We model blockholder governance as a sequential process, from less hostile private intervention, to confrontational public intervention, and finally exit. When the blockholder faces short-term incentives, the threat of public intervention and...Read more
This paper shows that short-term stock price concerns induce CEOs to take value-reducing actions. Vesting equity, our measure of short-term concerns, is positively associated with the probability of a firm...Read more
A long-held view in corporate circles has been that furious rapid trading in stock markets has been increasing in recent decades, justifying corporate governance and corporate law measures, such as development and application of judicial doctrine...Read more
Proposals to favor long-term shareholders of public firms are based on a widely-held belief: that long-term shareholders, unlike short-term shareholders, benefit from managers maximizing the long-term economic value generated by the firm. This...Read more
