652 research outputs found

    General Managerial Skills and External Communication

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    abstract: This paper examines whether CEOs with general managerial skills are better at achieving the goals of external communication. Using the General Ability Index developed by Custodio, Ferreira, and Matos (2013) to measure CEOs' general managerial skills, I find that firms with generalist CEOs are more likely to obtain the desired outcomes of communication, including the smaller difference between analyst forecasts and management guidance, less dispersion in analyst forecasts, higher analyst following, and higher institutional ownership, after controlling for CEO talent and the impact of Regulation FD. Moreover, I provide direct evidence that general managerial skills are more important to external communication under poor information environments. I also investigate the characteristics of analysts who follow firms with generalists, and my findings suggest the private interaction with analysts is an important communication channel for generalists. Finally, I find that generalists are able to attract dedicated investors and gain long-term capital for their firms. Overall, I provide evidence on the growing importance of general managerial skills in external communication. This paper offers new insights into why CEOs with general skills are paid at a premium over those with specific skills, as documented in previous studies.Dissertation/ThesisDoctoral Dissertation Accountancy 201

    CEO Narcissism and the Takeover Process: From Private Initiation to Deal Completion

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    Chief executive officer (CEO) narcissism affects the takeover process. Acquirer shareholders react less favorably to a takeover announcement when the target CEO is more narcissistic. Narcissistic acquiring CEOs negotiate faster. They are also marginally more likely to initiate deals. Acquirer CEO narcissism and target CEO narcissism are associated with a lower probability of deal completion and reduce the likelihood that the target CEO will be employed by the merged firm. Our findings highlight the importance of both acquirer and target CEO psychological characteristics throughout the takeover process

    Corporate philanthropy in the UK and US: the impact of cycles, strategy and CEO succession

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    Theoretical and empirical debates surrounding corporate philanthropy (CP) date back to the 1930s, but have recently grown in line with the importance of corporate social responsibility in the public realm. Through three papers, this thesis adds to these debates by filling gaps in our understanding of CP, relating to the cyclical nature of cash and in-kind giving, how different ways of giving can influence profitability, and the relative importance of the CEO. We do this using a panel of 620 large firms in the UK over 14 years, and 500 US firms over 12 years, enabling us to capture the heterogeneity between firms. Our key theoretical contribution is to state that an integrated theory ought to be developed, which considers the influence of firm costs, strategy and the CEO as factors determining CP. Given the exposed limitations of stakeholder, agency and leadership theories, we propose that a new theory be developed, one which stresses the importance of managerial discretion and values, whilst also considering how firm-level attributes can determine giving

    A Litner Model of Payout and Managerial Rents

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    We develop a dynamic agency model where payout, investment and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout in order to smooth their flow of rents. Total payout (dividends plus net repurchases) follows Lintner's (1956) target-adjustment model. Payout smooths out transitory shocks to current income and adjusts gradually to changes in permanent income. Smoothing is accomplished by borrowing or lending. Payout is not cut back to finance capital investment. Risk aversion causes managers to underinvest, but habit formation mitigates the degree of underinvestment.

    Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets

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    Employers structure pay and employment relationships to mitigate agency problems. A large literature in economics documents how the resolution of these problems shapes personnel policies and labor markets. For the most part, the study of agency in employment relationships relies on highly stylized assumptions regarding human motivation, e.g., that employees seek to earn as much money as possible with minimal effort. In this essay, we explore the consequences of introducing behavioral complexity and realism into models of agency within organizations. Specifically, we assess the insights gained by allowing employees to be guided by such motivations as the desire to compare favorably to others, the aspiration to contribute to intrinsically worthwhile goals, and the inclination to reciprocate generosity or exact retribution for perceived wrongs. More provocatively, from the standpoint of standard economics, we also consider the possibility that people are driven, in ways that may be opaque even to themselves, by the desire to earn social esteem or to shape and reinforce identity.agency, motivation, employment relationships, behavioral economics

    Are Managers 'Under-the-Weather' During Earnings Conference Calls?

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    Earnings conference calls represent an important communication channel between managers and investors. We examine the impact of weather-induced mood on manager behavior during these calls. Using a large sample of earnings conference calls from 2006 to 2017, we find managers speak more negatively and with less (more) quantitative information (uncertainty) when local weather conditions are bad. We further identify that this negative relation is less pronounced for CFOs than CEOs. Financial expertise mitigates negative behavior bias induced by weather and we confirm with subgroups of CEOs with previous financial experience. We document a significantly negatively market reaction to weather-induced behavior that cannot be explained by existing textual analysis methods. Our results remain significant after adding controls for investor mood, separating firms into those from big and small states, mediation tests, firm fixed effects, and propensity score matching. Taken together, our findings suggest that exogenous effects of bad weather significantly impact manager behavior that the market views negatively

    Explaining The International CEO Pay Gap: Board Capture Or Market Driven?

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    If we look at convergence through the lens of the Risk Adjustment Theory, then international pay convergence will only occur if U.S. and foreign CEOs\u27 firm-specific risk levels converge. Empirically, this is a difficult claim to test because of the paucity of data available on CEOs\u27 individual wealth levels and stockholdings. The one component we can most easily observe, stock option usage, is presently quite different, with U.S. levels far exceeding those abroad. For the near future, this trend seems likely to continue, making it difficult to forecast convergence any time soon. The international executive pay gap is one of the great puzzles of executive compensation. In this paper, I have argued that the divergence between American and foreign CEO pay can be explained by a variety of market-based theories. I claim that such theories cast more light on the persistence of these wage gaps than sole reliance on board capture claims. Does the international pay gap constitute a crisis in corporate governance that requires government intervention? No. For one thing, international pay levels are largely determined by underlying economic forces, such as the marginal revenue product of executives, the difference in alternative job prospects, and the relatively larger size of American firms. These factors are dictated by markets and will adjust as markets adjust. The pay gap will disappear if these conditions move toward convergence. Even if the pay gap is partially explained by differences in the relative bargaining power of American executives, it is unclear whether such differences arise from Board Capture or the Bargaining Power Theory. Which one is right leads to very different policy implications

    Explaining the International CEO Pay Gap: Board Capture or Market Driven?

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    One of the most puzzling aspects of executive compensation is the pay gap that exists between American and foreign Chief Executive Officers (CEOs). U.S. CEOs are paid vastly more than their foreign counterparts: they have higher base salaries, they receive larger bonuses, they get more stock options, and they are given bigger chunks of company restricted stock. Commentators and the financial press have been quick to claim that such differences can be explained by Board Capture, a theory that claims powerful American executives take advantage of weak domestic boards of directors and passive, dispersed shareholders to overpay themselves exorbitantly. According to Board Capture theorists, American CEOs orchestrate the appointments of their obedient subordinates as inside directors and of friendly, passive outside directors. The net result is a board comprised of compliant directors and a Compensation Committee that lacks the aggressive hard-nosed negotiators needed to keep executive pay in check. To make matters worse, the Compensation Committee\u27s advisors, usually paid consultants from a handful of well-known firms, have conflicts of interest that preclude them from giving truly disinterested advice. They tell directors to rely upon industry surveys of pay levels that have the (un)intended consequence of constantly ratcheting executive pay levels upward
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