Executive Compensation: The Trend Toward One Size Fits All
WFA Trefftzs Award for Best Paper
R&R, Journal of Accounting and Economics
Presentations: WFA (2021), SFS Cavalcade (2021), MFA (2021), FOM (2020)
I report a "one-size-fits-all" trend in the structure of executive compensation plans. The distribution of compensation across pay components —salary, bonus, stock awards, options, non-equity incentives, pensions, and perquisites— has become more similar since 2006. 24% of the variation across firms disappeared in the last thirteen years. Using panel data regressions and plausibly
exogenous shocks, I find that institutional investors' influence on management decisions and proxy advisors' recommendations are salient sources of this standardization. Finally, I find evidence suggesting that uniformity might come at the expense of optimal incentives, as increases in compensation similarity translate into lower shareholder value.
Leaky Director Networks and Innovation Herding (with Gerard Hoberg)
Presentations: AFA (2023), SFA (2022), FMCG (2022)
In this paper, we first document that, despite potential legal issues, overlapping directors are surprisingly prevalent among direct competitors. Using panel data regressions and plausibly exogenous shocks, we find that competing firms in markets with dense overlapping-director networks experience innovation herding, lose product differentiation, and ultimately perform poorly. Novel text-based network propagation tests of technologies show that intellectual property leakage plays a role as firms with dense overlapping director networks experience faster propagation of technologies to competitors. Finally, we find that directors benefit from these leakages and realize better career outcomes, even though systemic leakage across competitors can destroy value.
The Effect of Mandatory Information Disclosure on Financial Constraints
R&R, Journal of Financial and Quantitative Analysis
Presentations: AFA (2019), Trans-Atlantic Doctoral Conference (2019)
This paper examines the effects of mandatory disclosure on firms' financial constraints and investment policies. I study a regulatory reform requiring firms of a certain size to file a standard 10K instead of choosing between the standard form and an abbreviated 10K. Companies that voluntarily used the standard 10K form before the reform become less debt-constrained, issue more debt and increase their investment. The findings are consistent with mandatory disclosure providing a commitment device for future disclosure that reduces the agency cost of debt.