We take advantage of comprehensive panel data available as a result of the 2006 SEC disclosure rules on relative performance evaluation (RPE) to (i) better understand how firms choose performance peer groups used in CEO RPE contracts and (ii) to investigate the causal impact of mandatory...

Causal evidence on the effect of managerial ownership on firm performance is elusive due to a lack of within-firm variation and credible empirical designs. We identify this causal effect by exploiting the 2003 Tax Cut as a natural experiment, which increased net-of-tax effective managerial...

We use the 2003 NYSE and NASDAQ listing rules concerning board and committee independence as a quasi-natural experiment to examine the causal relations between board structure and CEO monitoring. Noncompliant firms forced to raise board independence or adopt a fully independent nominating...

This paper examines whether CEOs with shorter initial contract lengths suffer from greater pressure and consequently engage in more visible efforts via mergers and acquisitions (M&As). By using CEO initial fixed-term contracts and exploiting U.K. corporate governance reform as an exogenous...

The recent global financial crisis contributes for recognizing the importance of corporate governance mechanisms in the banking industry. Although mixed evidence is associated with the role of board of directors in non-financial industries, a few analyses have been made of the relation between...

The subprime crisis highlights how little we know about the governance of banks. This paper addresses a long-standing gap in the literature by analyzing board governance using a sample of banking firm data that spans forty years. We examine the relationship between board structure (size and...

Influenced by their compensation plans, CEOs make their own luck through decisions that affect future firm risk. After adopting a relative performance evaluation (RPE) plan, total and idiosyncratic risk are higher, and the correlation between firm and industry performance is lower. The opposite...

This paper investigates the role external advice plays in the board's determination of CEO compensation. We show that CEO incentive pay increases with the degree of compensation consultant independence using a quasi-natural experiment provided by the creation of an independent consultant after...

We study the role of the contractual time horizon of CEOs for CEO turnover and corporate policies. Using hand-collected data on 3,954 fixed-term CEO contracts, we show that remaining time under contract predicts CEO turnover. When contracts are close to expiration, turnover is more likely and is...

Whilst researchers extensively investigate executive incentives, very little appears in the literature on the effect of outside-director ‘skin in the game' on board monitoring and thus firm performance. Utilizing a unique panel dataset, we observe a sizeable positive relationship between...