Using a unique and rich database of high-technology firms in China, we show that effective enforcement of intellectual property rights at the provincial level is critical in encouraging financing and ...investing in R& D. Better enforcement of intellectual property (IP) rights positively affects firms' ability to acquire new external debt and allows firms to invest in more R&D, generate more innovation patents, and produce more sales from new products. Our results suggest that facilitating financing and investing in R&D are the channels through which better IP rights enforcement can affect economic growth.
Using Glassdoor's list of “Top CEOs by Employees' Choice,” we adopt a regression discontinuity (RD) specification to establish a causal link between the employee approval of CEOs and firm value. ...Having a CEO included in the top list results in an increase in firm performance in both stock returns and return on assets. Having a top CEO significantly increases a firm's employee efficiency, attraction to future employees, hiring of high-quality laborers such as inventors, and attraction to the customers. Our findings establish that the CEO-employee relationship is an important, though intangible, component of a corporation, and we emphasize the critical role of perceived corporate culture in the spirit of Guiso et al. (2015).
Nonexperimental data are used to evaluate impacts of a Bolivian preschool program on cognitive, psychosocial, and anthropometric outcomes. Impacts are shown to be highly dependent on age and exposure ...duration. To minimize the effect of distributional assumptions, program impacts are estimated as nonparametric functions of age and duration. A generalized matching estimator is developed and used to control for nonrandom selectivity into the program and into exposure durations. Comparisons with three groups-children in the feeder area not in the program, children in the program for ≤1 month, and children living in similar areas without the program-indicate that estimates are robust for significant positive effects of the program on cognitive and psychosocial outcomes with ≥7 months' exposure, although the age patterns of effects differ slightly by comparison group.
Extending the theories of social and place identity, we predict that CEO hometown identity has a positive and significant influence on firm innovation. Our empirical evidence, from publicly traded ...firms in China during 2002–2016, suggests that a firm whose CEO's hometown is in the same province or city as the firm's headquarters tends to invest more in R&D and generate more patent applications. Our results are robust to the firm fixed effects and we use difference-in-differences analysis and instrument variable regressions to mitigate endogeneity concerns. CEOs' hometown identity still has a strong and positive impact on innovation after we control for measures of social capital of CEOs. We identify the mechanisms behind the positive relation between firm innovation and CEO hometown identity: hometown CEOs enjoy more support from the board of directors, they are more willing to take risks, and they are more likely to have long-term visions.
•CEO hometown identity has a positive and significant influence on firm innovation.•The difference-in-differences and instrument variable methods are used to mitigate endogeneity concerns.•Hometown CEOs enjoy more support from the directors, and they are more willing to take risks.•We also find that hometown CEOs are more likely to have long-term visions.
Trust, Investment, and Business Contracting Ang, James S.; Cheng, Yingmei; Wu, Chaopeng
Journal of financial and quantitative analysis,
06/2015, Letnik:
50, Številka:
3
Journal Article
Recenzirano
How does trust affect business contracting at the firm level? We analyze the case of foreign high-tech companies investing in China, where the risk of expropriation of their intellectual property is ...high. We find that firms mitigate this type of risk by taking local trustworthiness into account when making investment decisions. Firms prefer to invest in regions where local partners and employees are considered more trustworthy; they are also more likely to establish joint ventures and to make greater research and development investments. We employ instrumental variable regressions and dynamic panel generalized method of moments estimators to alleviate endogeneity concerns and control for time-invariant heterogeneity.
We test the predictions of Titman (1984) and Berk, Stanton, and Zechner (2010) by examining the effect of leverage on labor costs. Leverage has a significantly positive impact on cash, equity-based, ...and total compensation of chief executive officers (CEOs). Compensation of new CEOs hired from outside the firm is positively related to prior-year firm leverage. In addition, leverage has a positive and significant impact on average employee pay. The incremental total labor expenses associated with an increase in leverage are large enough to offset the incremental tax benefits of debt. The empirical evidence supports the theoretical prediction that labor costs limit the use of debt.
Internal coalition and stock price crash risk Xu, Lin; Rao, Yulei; Cheng, Yingmei ...
Journal of corporate finance (Amsterdam, Netherlands),
October 2020, 2020-10-00, Letnik:
64
Journal Article
Recenzirano
We examine the impact of internal coalition, measured by the appointment of the top executives and directors by the CEO after he assumes office, on stock crash risk during 2000–2014. The ...appointment-based internal coalition has a positive and significant impact on stock crash risk. Internal coalition is a more important factor than measures of CEO power, such as CEO tenure and duality, in predicting stock price crash. We address the endogeneity concerns by utilizing an exogenous shock to the internal coalition to conduct difference-in-differences (DID) regressions. The main results survive numerous robustness tests.
We examine the role of financial analysts in forming institutional investors' investment decisions. In our model, a fund manager invests in a stock based on the optimal weighting of reports created ...by a biased sell-side analyst and an unbiased buy-side analyst. The manager puts a higher weight on the buy-side analyst's report when the quality of the buyside analyst's information relative to that of the sell-side analyst increases, or when the sell-side analyst's degree of bias or uncertainty about the bias increases. Utilizing a unique dataset of U.S. equity funds, we find evidence supporting our model predictions on how fund managers weigh buy-side research relative to sell-side and independent research.
Using a large hand-collected database of chief executive officer (CEO) bonus structures, we find that when a CEO’s bonus is directly tied to earnings per share (EPS), his company is more likely to ...conduct a buyback. This effect is especially pronounced when a company’s EPS is right below the threshold for a bonus award. Share repurchasing increases the probability the CEO receives a bonus and the magnitude of that bonus, but only when bonus pay is EPS based. Bonus-driven repurchasing firms do not exhibit positive long-run abnormal returns.
We show that high cash holdings can be used by executives in the ex post bargaining over their compensation. Cash holdings are positively associated with CEO compensation and is driven by non-salary ...components. In companies with weaker governance, this relation is more pronounced. Using exogenous shocks to the firm’s cash, we show that CEO compensation readily responds to increases in cash holdings, confirming that managers are able to derive personal benefits from excess cash holdings.
PDF
