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Working Paper
Was Sarbanes-Oxley Costly? Evidence from Optimal Contracting on CEO Compensation
This paper investigates the effects of the Sarbanes-Oxley Act (SOX) on CEO compensation, using panel data constructed for the S&P 1500 firms on CEO compensation, financial returns, and reported accounting income. Empirically SOX (i) changes the relationship between a firm?s abnormal returns and CEO compensation, (ii) changes the underlying distribution of abnormal returns, and (iii) significantly raises the expected CEO compensation in the primary sector. We develop and estimate a dynamic principal agent model of hidden information and hidden actions to explain these regularities. We find ...
Working Paper
“No more credit score”: employer credit check bans and signal substitution
In the past decade, most states have banned or considered banning the use of credit checks in hiring decisions, a screening tool that is widely used by employers. Using new Equifax data on employer credit checks, the Federal Reserve Bank of New York Consumer Credit Panel/Equifax data, and the LEHD Origin-Destination Employment data, we show that these bans increased employment of residents in the lowest-credit score census tracts. The largest gains occurred in higher-paying jobs and in the government sector. At the same time, using a large database of job postings, we show that employers ...
Journal Article
The role of financial reporting and transparency in corporate governance
The authors review recent literature on the role of corporate financial reporting and transparency in reducing governance-related agency conflicts between managers, directors, shareholders, and other stakeholders?most notably financial regulators?and suggest some avenues for future research. Key themes include the endogenous nature of governance mechanisms with respect to information asymmetry between contracting parties, the heterogeneous nature of the informational demands of contracting parties, and the corresponding heterogeneity of the associated governance mechanisms. The authors also ...
Working Paper
Who’s In and Who’s Out under Workplace COVID Symptom Screening?
COVID symptom screening, a new workplace practice, is likely to affect many millions of American workers in the coming months. Eleven states already require and federal guidance recommends frequent screening of employees for infection symptoms. This paper provides some of the first empirical work exploring the tradeoffs employers face in using daily symptom screening. First, we find that common symptom checkers will likely screen out up to 7 percent of workers each day, depending on the measure used. Second, we find that the measures used will matter for three reasons: many respondents report ...