Abstract We investigate how firms adjust corporate pension plans in response to economic policy uncertainty (EPU). Using a sample of US-listed firms, we find that increase underfunding levels when facing higher EPU. The result is robust controlling for portfolio returns, discount rates, plan sizes, liability, numbers employees, other macroeconomic factors, difference-in-differences and instrumental variable estimation, additional evidence risk-shifting. Further analysis reveals financial...

ABSTRACT In the wake of recent financial crises and corporate failures, chief executive officers (CEOs) are often blamed for their overconfidence leading to earnings manipulation excessive risks. Why is it then that these overconfident CEOs obtain job offers in first place? This paper presents a novel explanation co-existence CEO observed practice. an agency model with external capital market, I identify two potential reasons board hire design contract accommodates manipulation: internal...

How does product market competition influence whether CEOs with greater or lower levels of overconfidence are hired and overinvest in innovation? In a Cournot model which firms hire CEO to take charge research development (R&D) investment production decisions, this paper shows that overinvestment can be explained as an equilibrium outcome. More importantly, the intensity level (and R&D investment) exhibit inverted U-shaped relationship. As tends toward perfect competition, all realistic do...

Abstract We examine how product market competition (PMC) shapes chief executive officer's (CEO) power. Using various measures to capture both PMC and CEO power, our analyses, which include a quasi‐natural experiment, find evidence that CEOs have less power when the is more competitive. Furthermore, impact of on pronounced for firms with entrenched management, lower ownership, analyst coverage, experiencing good ‘luck’ (windfall performance). Our results suggest can act as substitute...

This study finds that even after controlling for board gender diversity, TMT diversity has a distinct and positive effect on corporate innovation. The also the joint interaction of tournament incentives is detrimental to innovation, implying two are substitutes. substitution persists beyond year female transition concentrated larger firms in low-technology industries. Our results robust across alternative measures incentives, representation, innovation accounting endogeneity both diversity....

Abstract We examine how chief executive officer (CEO) mobility affects corporate payouts. exploit US state courts’ staggered adoption of the inevitable disclosure doctrine (IDD) to obtain exogenous variation in mobility. report several findings. First, we find that firms IDD‐adopting states increase dividend payouts, whereas effect IDD on share repurchases is insignificant relative not states. Second, dividends concentrated run by CEOs having high ability. Third, increasing are less likely...

Abstract This paper analyzes the production and hedging decisions of a competitive firm under price uncertainty time‐inconsistent preferences. We show that would over‐hedge output choice be affected by firm's preferences distribution, thereby identifying novel circumstance which full‐hedge theorem separation may fail. Furthermore, when can hedge at same time as or ahead production, ex ante value is higher in former case, suggesting planning for risk backfire presence © 2014 Wiley...

We examine whether firms that face increased competition are more likely to seek uniformity in the incentive payments made top management teams (TMTs). Motivated by social comparison theory, we conjecture variation executive will reduce as a strategic response encourage TMT cooperation. test this hypothesis examining how dispersion changes following exogenous product market shocks from reduced tariff cuts. Matched difference-in-differences regressions on large sample of manufacturing between...

This paper analyzes how CEO turnover affects successive CEOs' financial reporting decisions and the capital market price. I show that when an outgoing (O) in period 1 is succeeded by incoming (N) 2, strategic interaction between O N leads to interlinked earnings reports. Specifically, level of reported lower, N's strategy more likely feature a downward bias. Furthermore, comparison two-CEO setting with no turnover, (i) 2 report sensitive private information control less report; (ii) control;...