In many instances, acirc;not;?independently mindedacirc;not;? top ranking executives can imposestrong discipline on their CEO, even though they are formally under his authority.This paper argues that the use of such a disciplining mechanism is a key feature ofgood corporate governance

In many instances, 'independently-minded' top-ranking executives can impose strong discipline on their CEO, even though they are formally under his authority. This paper argues that the use of such a disciplining mechanism is a key feature of good corporate governance. We provide robust...

The maturity of new debt issues predicts excess bond returns. When the share of long-term debt issues in total debt issues is high, future excess bond returns are low. This predictive power comes in two parts. First, inflation, the real short-term rate, and the term spread predict excess bond...

We propose and test a catering theory of nominal stock prices. The theory predicts that when investors place higher valuations on low-price firms, managers will maintain share prices at lower levels, and vice-versa. Using measures of time-varying catering incentives based on valuation ratios,...

This paper develops a simple equilibrium model of CEO pay. CEOs have differenttalents and are matched to firms in a competitive assignment model. In market equilib-rium, a CEO s pay changes one for one with aggregate firm size, while changing muchless with the size of his own firm. The model...

This paper presents a united framework for understanding the determinants of both CEOincentives and total pay levels in competitive market equilibrium. It embeds a modified principal-agent problem into a talent assignment model to endogenize both elements of compensation. The model s closed form...