We explain when and how staggered difference-in-differences regression estimators, commonly applied to assess the impact of policy changes, are biased. These biases likely be relevant for a large portion research settings in finance, accounting, law that rely on treatment timing, can result Type-I Type-II errors. summarize three alternative estimators developed econometrics literature addressing these biases, including their differences tradeoffs. apply re-examine prior published results...

We explain when and how staggered difference-in-differences regression estimators, commonly applied to assess the impact of policy changes, are biased. These biases likely be relevant for a large portion research settings in finance, accounting, law that rely on treatment timing, can result Type-I Type-II errors. summarize three alternative estimators developed econometrics literature addressing these biases, including their differences tradeoffs. apply re-examine prior published results...

Abstract We introduce a parsimonious framework for choosing among alternative expected-return proxies (ERPs) when estimating treatment effects. By comparing ERPs’ measurement error variances in the cross-section and time series, we provide new evidence on relative performance of firm-level ERPs nominated by recent studies. Generally, “implied-costs-of-capital” metrics perform best whereas “characteristic-based” cross-section. Factor-based ERPs, even latest renditions, poorly. revisit four...

Firms with central boards of directors earn superior risk-adjusted stock returns. A long (short) position in the most (least) firms earns average annual returns 4.68%. also experience higher future return-on-assets growth and more positive analyst forecast errors. Return prediction, growth, errors are concentrated among high opportunity or confronting adverse circumstances, consistent boardroom connections mattering for standing to benefit from information resources exchanged through...

In the presence of managerial short-termism and asymmetric information about skill effort provision, firms may opportunistically shift earnings from uncertain to more certain times. We document that report negative discretionary accruals when financial markets are less their future prospects. Stock-price responses surprises moderated firm-level uncertainty is high, consistent with performance being attributed luck rather than effort, which can create incentives toward lower-uncertainty...

In an influential study, Gompers, Ishii, and Metrick (2003) show that a trading strategy based on index of 24 governance provisions (G-Index) would have earned abnormal returns during the 1991-1999 period, this intriguing finding has attracted much attention ever since it was reported. We identified correlation between G-Index (as well as E-Index matter most) did not exist subsequent period 2000-2008, we investigate what could explain both existence such 1990s its disappearance. provide...

We introduce a parsimonious framework for choosing among alternative expected-return proxies (ERPs) when estimating treatment effects. By comparing ERPs' measurement-error variances in the cross-section and time series, we provide new evidence on relative performance of firm-level ERPs nominated by recent studies. Generally, "implied-costs-of-capital" metrics perform best series; while "characteristic-based" cross-section. Factor-based ERPs, even latest renditions, poorly. revisit four prior...

Journal Article Short-Termism and Capital Flows Get access Jesse M Fried, Fried Harvard Law School Search for other works by this author on: Oxford Academic Google Scholar Charles C Y Wang Business Send correspondence to C.Y. Wang, School, Soldiers Field, Boston, MA 02163; telephone: 617-496-9633. E-mail: cwang@hbs.edu. The Review of Corporate Finance Studies, Volume 8, Issue 1, March 2019, Pages 207–233, https://doi.org/10.1093/rcfs/cfy011 Published: 06 December 2018

In July 2020, the European Commission published "Study on directors' duties and sustainable corporate governance" by EY. The Report purports to find evidence of debilitating short-termism in EU governance recommends many changes support governance. this paper, we point out deep flaws Report's analysis. We recently submitted content paper response Commission's call for feedback. First, defines problem as one pernicious that damages environment, climate, stakeholders. But mistakenly conflates...

In an important and influential work, Gompers, Ishii, Metrick (2003) show that a trading strategy based on index of 24 governance provisions (G-Index) would have earned abnormal returns during the 1991-1999 period, this intriguing finding has attracted much attention ever since it was reported.We G-Index (as well as E-Index subset six matter most) no longer associated with period 2000-2008, or any subperiods within it, we provide evidence consistent hypothesis disappearance...

The well-established negative correlation between staggered boards (SBs) and firm value could be due to SBs leading lower or a reflection of low-value firms' greater propensity maintain SBs. We analyze the causal question using natural experiment involving two Delaware court rulings ― separated by several weeks going in opposite directions that affected antitakeover force contribute long-standing debate on presenting empirical evidence consistent with market viewing as for firms.

Despite their popularity as proxies of expected returns, the implied cost capital's (ICC) measurement error properties are relatively unknown. Through an in-depth analysis a popular implementation ICCs by Gebhardt, Lee, and Swaminathan (2001) (GLS), I show that ICC errors can be not only nonrandom persistent, but also associated with firms' risk or growth characteristics, implying regressions likely confounded spurious correlations. Moreover, document biases in GLS' driven analysts'...

ABSTRACT Staggered boards (SBs) are one of the most potent common entrenchment devices, and their value effects considerably debated. We study SBs' on firm value, managerial behavior, investor composition using a quasi‐experimental setting: 1990 law that imposed SBs all Massachusetts‐incorporated firms. find relative to matched control group companies, for treated companies led an increase in Tobin's Q, investment capital expenditures R&D, patents, higher‐quality patented innovations,...