Essays on Executive Turnover

Chapter 1 deviates from the conventional practice by highlighting an alternative to forced CEO turnover. An interesting puzzle in corporate finance is the week sensitivity of disciplinary action against CEO to poor firm performance. I show that this weak relation is in part driven by an overlooked alternative to firing, which in practice takes the form of splitting the CEO-Chairman role or demoting the incumbent CEO to the executive Chairman position. I first document that such demotions are a frequently used alternative disciplinary mechanism, accounting for nearly 40% of all involuntary CEO transitions. I further show that the use of this mechanism is concentrated among firms in which the CEO is most entrenched or the cost of firing its CEO is high, i.e. CEOs with firm or industry-specific managerial skills and those with strong long-term performance and weak governance. Market reactions to CEO demotions are positive, on average. Finally, I show that classifying CEO demotions as an alternative form of involuntary turnover magnifies the sensitivity of involuntary turnover to firm performance and eliminates the relation between performance and voluntary turnover. In chapter 2, we examine the role of deferred vesting of stock and option grants in reducing executive turnover. To the extent an executive forfeits all unvested stock and option grants if she leaves the firm, deferred vesting will increase the cost (to the executive) of early exit. Using pay Duration proposed in Gopalan, et al., (forthcoming) as a measure of the length of managerial pay, we find that CEOs and non-CEO executives with longer pay Duration are less likely to leave the firm voluntarily. Employing the vesting of a large prior-year stock/option grant as an instrument for Duration, we find the effect to be causal. CEOs with longer pay Duration are also less likely to experience a forced turnover and the sensitivity of forced CEO turnover to firm performance is significantly lower in firms that offer longer duration pay. Overall, our study highlights a strong link between compensation design and turnover for top executives. Finally, in chapter 3, we develop and test a new explanation for forced CEO turnover. Investors may disagree with management on the optimal course of corporate actions due to heterogeneous prior beliefs. Such disagreement may be persistent and costly to firms, and thus create incentives for firms to replace CEOs who investors tend to disagree with. We use this logic to develop and provide evidence for three hypotheses. First, firms with higher investor-management disagreement are more likely to fire their CEOs, and this effect is more pronounced in more-financially-constrained firms as well as those with less-entrenched CEOs and stronger shareholder governance. Second, firms are more likely to hire an external CEO as a successor if investor-management disagreement with the departing CEO is higher. Third, investor-management disagreement declines following forced CEO turnover. Thus, the evidence sheds new light on how disagreement between management and investors shapes one important aspect of corporate governance--the replacement of CEOs

Global incidence, prevalence, years lived with disability (YLDs), disability-adjusted life-years (DALYs), and healthy life expectancy (HALE) for 371 diseases and injuries in 204 countries and territories and 811 subnational locations, 1990–2021: a systematic analysis for the Global Burden of Disease Study 2021

Background: Detailed, comprehensive, and timely reporting on population health by underlying causes of disability and premature death is crucial to understanding and responding to complex patterns of disease and injury burden over time and across age groups, sexes, and locations. The availability of disease burden estimates can promote evidence-based interventions that enable public health researchers, policy makers, and other professionals to implement strategies that can mitigate diseases. It can also facilitate more rigorous monitoring of progress towards national and international health targets, such as the Sustainable Development Goals. For three decades, the Global Burden of Diseases, Injuries, and Risk Factors Study (GBD) has filled that need. A global network of collaborators contributed to the production of GBD 2021 by providing, reviewing, and analysing all available data. GBD estimates are updated routinely with additional data and refined analytical methods. GBD 2021 presents, for the first time, estimates of health loss due to the COVID-19 pandemic. Methods: The GBD 2021 disease and injury burden analysis estimated years lived with disability (YLDs), years of life lost (YLLs), disability-adjusted life-years (DALYs), and healthy life expectancy (HALE) for 371 diseases and injuries using 100 983 data sources. Data were extracted from vital registration systems, verbal autopsies, censuses, household surveys, disease-specific registries, health service contact data, and other sources. YLDs were calculated by multiplying cause-age-sex-location-year-specific prevalence of sequelae by their respective disability weights, for each disease and injury. YLLs were calculated by multiplying cause-age-sex-location-year-specific deaths by the standard life expectancy at the age that death occurred. DALYs were calculated by summing YLDs and YLLs. HALE estimates were produced using YLDs per capita and age-specific mortality rates by location, age, sex, year, and cause. 95% uncertainty intervals (UIs) were generated for all final estimates as the 2·5th and 97·5th percentiles values of 500 draws. Uncertainty was propagated at each step of the estimation process. Counts and age-standardised rates were calculated globally, for seven super-regions, 21 regions, 204 countries and territories (including 21 countries with subnational locations), and 811 subnational locations, from 1990 to 2021. Here we report data for 2010 to 2021 to highlight trends in disease burden over the past decade and through the first 2 years of the COVID-19 pandemic. Findings: Global DALYs increased from 2·63 billion (95% UI 2·44–2·85) in 2010 to 2·88 billion (2·64–3·15) in 2021 for all causes combined. Much of this increase in the number of DALYs was due to population growth and ageing, as indicated by a decrease in global age-standardised all-cause DALY rates of 14·2% (95% UI 10·7–17·3) between 2010 and 2019. Notably, however, this decrease in rates reversed during the first 2 years of the COVID-19 pandemic, with increases in global age-standardised all-cause DALY rates since 2019 of 4·1% (1·8–6·3) in 2020 and 7·2% (4·7–10·0) in 2021. In 2021, COVID-19 was the leading cause of DALYs globally (212·0 million [198·0–234·5] DALYs), followed by ischaemic heart disease (188·3 million [176·7–198·3]), neonatal disorders (186·3 million [162·3–214·9]), and stroke (160·4 million [148·0–171·7]). However, notable health gains were seen among other leading communicable, maternal, neonatal, and nutritional (CMNN) diseases. Globally between 2010 and 2021, the age-standardised DALY rates for HIV/AIDS decreased by 47·8% (43·3–51·7) and for diarrhoeal diseases decreased by 47·0% (39·9–52·9). Non-communicable diseases contributed 1·73 billion (95% UI 1·54–1·94) DALYs in 2021, with a decrease in age-standardised DALY rates since 2010 of 6·4% (95% UI 3·5–9·5). Between 2010 and 2021, among the 25 leading Level 3 causes, age-standardised DALY rates increased most substantially for anxiety disorders (16·7% [14·0–19·8]), depressive disorders (16·4% [11·9–21·3]), and diabetes (14·0% [10·0–17·4]). Age-standardised DALY rates due to injuries decreased globally by 24·0% (20·7–27·2) between 2010 and 2021, although improvements were not uniform across locations, ages, and sexes. Globally, HALE at birth improved slightly, from 61·3 years (58·6–63·6) in 2010 to 62·2 years (59·4–64·7) in 2021. However, despite this overall increase, HALE decreased by 2·2% (1·6–2·9) between 2019 and 2021. Interpretation: Putting the COVID-19 pandemic in the context of a mutually exclusive and collectively exhaustive list of causes of health loss is crucial to understanding its impact and ensuring that health funding and policy address needs at both local and global levels through cost-effective and evidence-based interventions. A global epidemiological transition remains underway. Our findings suggest that prioritising non-communicable disease prevention and treatment policies, as well as strengthening health systems, continues to be crucially important. The progress on reducing the burden of CMNN diseases must not stall; although global trends are improving, the burden of CMNN diseases remains unacceptably high. Evidence-based interventions will help save the lives of young children and mothers and improve the overall health and economic conditions of societies across the world. Governments and multilateral organisations should prioritise pandemic preparedness planning alongside efforts to reduce the burden of diseases and injuries that will strain resources in the coming decades. Funding: Bill & Melinda Gates Foundation

Evaluation of hardening models to simulate joints in timber shear walls

The properties of sheathing-to-framing joints considerably affect the load carrying capacity of a light-frame timber shear wall. A fastener with isotropic or kinematic hardening properties is modelled for the sheathing-to-framing joints with a zero-length element, with coupled properties in two perpendicular (orthogonal translational)directions to avoid the overestimation achieved with an uncoupled alternative. A single fastener experiment is performedto determine the elastic and plastic properties. For both fastener level and wall level modelling, monotonic as well ascyclic loading scheme is analysed. A concept of modelling the elasto-plastic coupled behaviour with hardening of theconnector model for the fasteners is suggested. A damage response of the fastener is also studied to estimate the failurein load capacity of the connector model and decrease in the wall capacity after the maximum loading

Disagreement-induced CEO turnover

We propose and test a new explanation for forced CEO turnover, and examine its implications for the impact of firm performance on CEO turnover. Investors may disagree with management on optimal decisions due to heterogeneous prior beliefs. Theory suggests that such disagreement may be persistent and costly to firms; we document that this induces them to sometimes replace CEOs who investors disagree with, controlling for firm performance. A lower level of CEO-investor disagreement serves to partially “protect” CEOs from being fired, thus reducing turnover-performance sensitivity, which we also document. We also show that firms are more likely to hire an external CEO as a successor if disagreement with the departing CEO is higher. Disagreement declines following forced CEO turnover. Using various empirical strategies, we rule out other confounding interpretations of our findings. We conclude that disagreement, independently of firm performance, affects forced CEO turnover

Liquid Stock as an Acquisition Currency (CEIBS Working Paper, No. 018/2020/FIN, 2020)

We examine how stock liquidity affects acquisitions. We hypothesize that liquidity enhances acquirer stock as an acquisition currency, especially when the target is relatively less liquid. As hypothesized, more liquid firms are more likely to make acquisitions and the difference in stock liquidity between acquirer and target firms increases payment with stock, reduces acquisition premiums, and improves acquirer announcement returns in equity deals. To exploit benefits of liquidity, firms take steps to improve stock liquidity prior to stock acquisitions. Our empirical identification relies on policy initiatives that exogenously increase stock liquidity

An experimental analysis of full scale light-frame timber modules

Prefabricated timber modules are being increasingly used in the load -bearing structure of entire residential buildings reaching heights up to six stories. The development is driven by the demand of high -quality housing that remains affordable while fulfilling tough environmental requirements imposed on modern construction. To enable further development of this type of buildings additional research is needed despite the considerable number of studies previously performed. This study provides an extensive experimental investigation by subjecting three modules to three different load cases. In each load case, the modules were initially loaded with dead -load placed atop of the module. Thereafter the modules were laterally loaded at the top using a servo hydraulic piston in displacement control. The main aim of the study was to assess the structural behavior of these modules under combined lateral and vertical loading, and also to generate experimental data suitable for verification of finite element models. Results from the test series reveal significant variation in racking stiffness and racking strength depending on the module's design. Furthermore, in some cases more stiff and stronger mechanical inter -module connections are needed to enhance their global structural performance. Finally, the experimental results reveal that the modules are relatively ductile in their shear response when subjected to horizontal load