We examine how ex ante financial distress risk affects CEO compensation. In order to disentangle the joint effects of performance on compensation and distress risk, we focus our analyses on new CEOs. Our results indicate financial distress risk affects compensation through two channels. First,...

This paper analyzes the performance consequences of employee stock options for a broad sample of firms during the period 1996-1999. Our tests are performed separately for the top 5 executives and all other employees. We estimate the expected level of option incentives based on each firm's...

Directors' and officers' (D&O) legal liability insurance is commonly provided to corporate executives and directors. Prior literature suggests managers are more willing to engage in opportunistic behaviors when their personal assets are more protected from litigation risk. Therefore, information...

We examine the causal effect of institutional ownership on insider trading using a regression discontinuity design to analyze exogenous differences in institutional ownership around Russell Index reconstitutions. Our findings indicate institutional investors influence insider trading behavior....

Approximately 60% of adjacent fiscal quarters contain a different number of calendar days. Our preliminary results indicate it is important for analysts to adjust for changes in quarter length when making forecasts. However, we find the quarterly change in days is positively associated with...

This paper investigates whether employees in conjunction with their professional networks function as information intermediaries. Collectively, employees have access to value-relevant information that can be distributed through both their direct professional contacts and the contacts of their...

Directors' and Officers' (D&O) legal liability insurance is a common component of CEO compensation packages. We expect managers are more willing to engage in opportunistic behaviors when their personal assets are protected from litigation risk. Therefore, information about D&O policy details is...

We examine the effects of quasi-indexer ownership on conditional conservatism using the plausibly exogenous discontinuity in quasi-indexer ownership around the Russell 1000/2000 index cutoff. Using both regression discontinuity and instrumental variable research designs, we find higher...

Insider trading conveys insiders' private information to outsiders. This private information potentially benefits rival firms, which may reduce the competitive advantage of the insiders' firms. Using multiple approaches to identify proprietary information risk, we find proprietary costs are...