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Bushman’s PhD Seminar 2015
We are going to look at issues related to corporate governance including incentive contracting, incentives and earnings management, CEO turnover, board networks, and corporate culture.
I. Wed 18th Nov: 2:30pm to 6:30pm Room 3500
To be discussed in class
Bushman, R., and A. Smith, 2001. Financial Accounting Information and Corporate Governance. Journal of Accounting and Economics. Volume 31/32. (Read pages 237-264 focusing on the theoretical framework section.
An Analysis of the Relation Between the Stewardship and Valuation Roles of Earnings,” R. Bushman, Ellen Engel, and Abbie Smith. Journal of Accounting Research Volume 44 Number 1 March 2006, pp. 53-83.
Related Papers
"Incentive Contracting and Value-Relevance of Earnings and Cash Flows," Banker, Huang and R. Natarajan, Journal of Accounting Research, (June 2009), 47, 3, pp. 647-678.
Gjesdal, F. (1981): Accounting for stewardship, Journal of Accounting Research 19, 208-231.
“Transparency, Financial Accounting Information and Corporate Governance,” with Abbie Smith. Federal Reserve Bank of New York’s Economic Policy Review, April 2003 Volume 9, Number 1 : 65-87.
Shleifer, A., Vishny, R., 1997. A survey of corporate governance. Journal of Finance 52 (2), 737–783.
Michael C. Jensen and William H. Meckling 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, October, 1976, V. 3, No. 4, pp. 305-360.
II. Monday 23rd Nov: 2:00pm to 5pm Room 2600
Interactions between governance and corporate culture
To be discussed in class
(Read the first few sections on the Kreps model and then as much as you can take!)
Rob Davidson, Aiyesha Dey and Abbie Smith. JFE 2013. Executives’ “Off-the-Job” Behavior, Corporate Culture, and Financial Reporting Risk.
Robert Bushman. Rob Davidson, Aiyesha Dey and Abbie Smith. 2015. Bank CEO Materialism, Corporate Culture and Risk.
Related Papers
Andrew Lo, 2015. The Gordon Gekko Effect: The Role of Culture in the Financial Industry. Working paper MIT.
"The Values of Corporate Culture," Luigi Guiso, Paola Sapienza, Luigi Zingales. Journal of Financial Economics, forthcoming.
Dudley, W. 2014. Enhancing Financial Stability by Improving Culture in the Financial Services Industry. Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, Federal Reserve Bank of New York, New York City.
"How Pervasive is Corporate Fraud?" Alexander Dyck, Adair Morse, Luigi Zingales, working paper, August 2014.
CHRISTA H.S. BOUWMAN. The Role of Corporate Culture in Mergers & Acquisitions. In: Etienne Perrault (ed.), “Mergers and Acquisitions: Practices, Performance and Perspectives,” NOVA Science Publishers, May 2013
III. Wednesday December 2, 2015: 2:30pm to 5:30pm Room 3500
Performance risk, managerial talent, incentive design
To be discussed in class
Risk and CEO Turnover, with Zhonglan Dai and Xue Wang. Journal of Financial Economics Volume 96, Issue 3, June 2010, Pages 381-398
Learning about CEO Ability and Stock Return Volatility, (Yihui Pan, Tracy Yue Wang and Michael Weisbach), Review of Financial Studies, Vol. 28 (June 2015) pp. 1623-1666.
“Understanding Corporate Governance through Learning Models of Managerial Competence” (Benjamin E. Hermalin and Michael Weisbach).
Related Papers
Guay, Wayne R. and Taylor, Daniel J. and Xiao, Jason J., Adapt or Perish: Evidence of CEO Adaptability to Industry Shocks. WP Wharton.
Taylor, Lucian A., CEO Wage Dynamics: Estimates from a Learning Model (October 16, 2012). Journal of Financial Economics (JFE), Vol. 108, No. 1, 2013. http://ssrn.com/abstract=1686068
Ellul, Andrew, The Role of Risk Management in Corporate Governance (September 1, 2015). http://ssrn.com/abstract=2688106
Larcker, David F. and Tayan, Brian, What is CEO Talent Worth? (January 24, 2012). Rock Center for Corporate Governance at Stanford University, http://ssrn.com/abstract=1991251
Edmans, Alex and Gabaix, Xavier, Executive Compensation: A Modern Primer, 2016. Journal of Economic Literature, vol. 54, no. 4, 1232–87. Available at SSRN: http://ssrn.com/abstract=2576707
Eisfeldt, Andrea L. and Kuhnen, Camelia M., CEO Turnover in a Competitive Assignment Framework (April 23, 2010). Journal of Financial Economics (JFE), No. 109, 2013.
Demerjian, P., B. Lev, S. McVay. 2012. Quantifying managerial ability: A new measure and validity tests. Management Science, 58 (7), 1229-1248.
Demerjian, P., B. Lev, M. Lewis, S. McVay. 2013. Managerial ability and earnings quality. The Accounting Review, 88 (2), 463-498.
IV. Wednesday December 9, 2015: 2:30pm to 5:30pm Room 3500
Social Networks and governance Basic Concepts of Networks Networks, Crowds, and Markets
Larcker, David F. and So, Eric C. and Wang, Charles C. Y., Boardroom Centrality and Firm Performance (January 13, 2013). Journal of Accounting & Economics (JAE), 55(2-3): 225-250
Engelberg, Joseph, Penjie Gao and Christopher Parsons, Friends with Money, Journal of Financial Economics (2012), JFE Fama-DFA Best Paper Award, 2nd Place
Houston, Joel F. and Lee, Jongsub and Suntheim, Felix, Social Networks in the Global Banking Sector (July 22, 2015). http://ssrn.com/abstract=2288134
Related Readings
Fracassi, C., and G. Tate. 2012. External networking and internal firm governance. Journal of Finance 67(1): 153–194.
Engelberg, Joseph, Penjie Gao and Christopher Parsons, 2013. The Price of a CEO’s Rolodex. The Review of Financial Studies / v 26 n 1 2013.
Stefania Vitali, James B. Glattfelder, Stefano Battiston, 2011. The Network of Global Corporate Control, 2011. PLoS ONE October 2011 | Volume 6 | Issue 10.
James B. Glattfelder, 2012. The Bow-Tie Model of Ownership Networks, in Decoding Complexity.
V. Sat 12th Dec: 10:00am to 2:00pm Room 3500
Cash Flow Rights, Control Rights and Governance
Taylor, Lucian A., Why are CEOS Rarely Fired? Evidence from Structural Estimation. The Journal Of Finance, VOL. LXV, NO. 6, 2010
Dey, Aiyesha and Nikolaev, Valeri V. and Wang, Xue, Disproportional Control Rights and the Governance Role of Debt (March 2015). Management Science, Forthcoming. : http://ssrn.com/abstract=2600111
Governance, Competition and Opportunistic Accounting Choices by Banks. Robert Bushman, Susie Wang and Christopher Williams, August 2015.
Related reading
Lin, Chen and Ma, (马跃) Yue and Malatesta, Paul H. and Xuan, Yuhai, Corporate Ownership Structure and Bank Loan Syndicate Structure (March 7, 2011). Journal of Financial Economics (JFE), Vol. 104, No. 1, 2012
Alexander Dyck and Luigi Zingales. 2004. Control Premiums and the Effectiveness of Corporate Governance Systems. Journal of Applied Corporate Finance.
VI and VII January Sessions
Governance and Earnings Management
Structural Models, Earnings Quality and Governance
Nikolaev, Valeri V., Identifying Accounting Quality (October 12, 2015). Chicago Booth Research Paper No. 14-28. http://ssrn.com/abstract=2484958
Gerakos, Joseph and Kovrijnykh, Andrei, Performance Shocks and Misreporting (2013). Journal of Accounting and Economics, 56, 57–72; http://ssrn.com/abstract=1546478
Has moral hazard become a more important factor in managerial compensation?, by G. Gayle and R. Miller (AER 2009)
Accounting and Governance
Armstrong, Chris and Vashishtha, Rahul, 2012. Executive Stock Options, Differential Risk-Taking Incentives, and Firm Value. Journal of Financial Economics
Portfolio Considerations in Valuing Executive Compensation. Richard A. Lambert, David F. Larcker and Robert E. Verrecchia
Journal of Accounting Research, Vol. 29, No. 1 (Spring, 1991), pp. 129-149
Armstrong, Chris and Larcker, David F. and Ormazabal, Gaizka and Taylor, Daniel J., The Relation between Equity Incentives and Misreporting: The Role of Risk-Taking Incentives (November 20, 2012). Journal of Financial Economics (JFE), 109 (August 2013): 327-350
Understanding the Relation between Executives’ Incentives and Reported Performance. 2015. Robert Bushman, Dai Zhonglan, Weining Zhang.
Armstrong, Chris and Core, John E. and Guay, Wayne R., Do Independent Directors Cause Improvements in Firm Transparency? 2014, JFE
Hazarika, Sonali and Karpoff, Jonathan M. and Nahata, Rajarishi, 2012. Internal Corporate Governance, CEO Turnover, and Earnings Management. JFE
Armstrong, C., Jagolinzer, A., Larcker, D., 2010. Chief executive officer equity incentives and accounting irregularities. Journal of Accounting Research 48, 225–271.
Issues of endogeneity in governance research
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