Using granular payroll data on 22 million federal employees, we study how regulators respond to revolving door incentives: the option to obtain a job in the private sector. We document bunching of salaries just below a threshold that triggers post-government employment restrictions, indicating a deliberate effort to preserve private sector opportunities. Individuals just below the threshold are more likely to exit and become lobbyists. Agencies with significant bunching regulate high-paying industries, initiate fewer enforcement actions, and issue less costly rules, suggesting regulatory capture. Estimating a structural model, we show that eliminating the restriction will increase incentive distortion by 1.7%.

We study the effect of government-subsidized childcare on women’s career outcomes and firm performance using linked tax filing data. Exploiting a universal childcare reform in Quebec in 1997 and the variation in its timing relative to childbirth across cohorts of parents, we show that earlier access to childcare increases employment among new mothers, particularly among those previously unemployed. Earlier childcare access increases new mothers’ reallocation of careers across firms, leading to higher earnings and higher productivity. Firms traditionally unattractive to mothers with young children benefited from the reform, drawing more young female workers and experiencing better performance. Our results suggest that childcare frictions hamper women’s career progression and their allocation of human capital in the labor market.

Entrepreneurs with better diversified portfolios provide more insurance to employees against labor income risk: in a sample of over 524,000 Canadian firms and 858,000 owners, firms owned by more diversified entrepreneurs offer more stable jobs and earnings to employees when faced by idiosyncratic shocks. A one standard deviation increase in owner’s diversification reduces the shock’s pass-through rate to labor layoffs by 13% and to workers’ earnings by 41%. The data are consistent with such insurance being partly provided to retain valuable human capital and partly to avoid costly terminations. There is no evidence of insurance being priced in average wages.

Why do so few women become CEOs? We answer the question by estimating a dynamic model of the CEO gender decision that contains three sources of gender-based differences: unobserved productivity, search frictions that reflect limited female labor supply, and employer disutility arising from discrimination against women. We find that the most crucial factor in explaining the apparent glass ceiling is the shortage of suitable candidates. Net of the availability of suitable candidates, boards are in favor of hiring female CEOs.

We find widespread evidence of firms appearing to avoid paying overtime wages by exploiting a federal law that allows them to do so for employees termed as “managers” and paid a salary above a pre-defined dollar threshold. We show that listings for salaried positions with managerial titles exhibit an almost five-fold increase around the federal regulatory threshold, including the listing of managerial positions such as “Directors of First Impression,” whose jobs are otherwise equivalent to non-managerial employees (in this case, a front desk assistant). Overtime avoidance is more pronounced when firms have stronger bargaining power and employees have weaker rights. Moreover, it is more pronounced for firms with financial constraints and when there are weaker labor outside options in the region. We find stronger results for occupations in low-wage industries that are penalized more often for overtime violations. Our results suggest broad usage of overtime avoidance using job titles across locations and over time, persisting through the present day. Moreover, the wages avoided are substantial - we estimate that firms avoid roughly 13.5% in overtime expenses for each strategic “manager” hired during our sample period.

What characterizes the business angels that invest in early stage innovative firms and what determines their investment performance? We use Norwegian population data on equity transactions for the years 2004--2018 and find that angel investors earn higher returns in their public stock investments than other investors. Their angel investment returns in innovative firms are highly skewed and we document a pronounced performance persistence in angel investments among angel investors.

Using both the onset of the US-China trade war in 2018 and the most recent Russia-Ukraine conflict and associated trade tensions, we show that government-linked firms increase their importing activity by roughly 33% (t=4.01) following the shock, while non-government linked firms trading to the same countries do the opposite, decreasing activity. These increases appear targeted, in that we see no increase for government-linked supplier firms generally to other countries (even countries in the same regions) at the same time, nor of these same firms in these regions at other times of no tension. In terms of mechanism, government supplier-linked firms are nearly twice as likely to receive tariff exemptions as equivalent firms doing trade in the region who are not also government suppliers. More broadly, these effects are increasing in level of government connection. For example, firms that are geographically closer to the agencies to which they supply increase their imports more acutely. Using micro-level data, we find that government supplying firms that recruit more employees with past government work experience also increase their importing activity more – particularly when the past employee worked in a contracting role. Lastly, we find evidence that this results in sizable accrued benefits in terms of firm-level profitability, market share gains, and outsized stock returns.

We examine the survival, profitability, and employment profiles of private equity (PE) acquired hospitals. Target hospitals sustain their survival rates and improve in profitability. Although employment and wage expenditures substantially decline, the effect differs across employee types: The decline in core medical workers is short-lived, while the decline in administrative workers and their wages persists. These changes are more pronounced for nonprofit targets, and targets acquired into larger systems, and PEs with healthcare industry expertise. We do not find patient outcomes to worsen at acquired hospitals. Our results suggest that PE acquirers improve hospitals’ operational efficiency without compromising healthcare quality.

We examine why institutional investors vote the way they vote on director elections, using a novel dataset on voting rationales provided by institutional investors. We find that the most important reasons for opposing directors are board independence, board diversity, tenure, firm governance, and busyness; institutional investors are also increasingly voting against directors to hold them accountable for failure to address environmental and social issues. We find that institutional investors' concerns are well-grounded: companies with low board gender diversity receive more rationales on board diversity, similar for companies with long director tenure and busy directors. This is consistent with institutional investors devoting significant effort toward governance research. Finally, companies with high dissent voting related to board diversity, tenure, and busyness improve their board composition in the following year. Our results suggest that directors are willing to address concerns that result in high shareholder dissent, and voting rationales can be an effective tool to communicate the source of dissent.

Virtual-only shareholder meetings have become dramatically more common following Covid-19. By creating a unique dataset documenting questions shareholders submitted at virtual-only shareholder meetings, I document that precisely when shareholders vote against the directors proposed by management, indicating contention with management, firms are likely to ignore shareholders’ questions. Similarly, I show that when such low-support votes prevail, transcripts of virtual-only shareholder meetings reveal that firms are likely to explicitly limit the scope of questions they are willing to address at the meeting, and not reveal at the meeting precise vote outcomes. Companies that use such methods have significantly more limited communication at virtual-only shareholder meetings, and these methods are significantly more common at virtual-only meetings relative to inperson meetings. Overall, relative to in-person meetings, virtual-only meetings are shorter and dedicate less time to addressing shareholders’ concerns

This paper examines racial preferences of shareholders in the context of corporate director elections. We document a higher propensity of mutual fund managers to vote for director nominees who match their racial/ethnic identity. The same-race preference is more prevalent in elections involving nominees receiving negative recommendations from the dominant proxy advisor ISS. We rule out various potential channels --statistical discrimination, value maximization, conflicts of interest, and social networks-- using high-dimensional fixed effect models along with heterogeneity tests. Additional evidence indicates the documented same-race preference aligns with taste-based biases, and has important consequences for labor market outcomes of director candidates.

This paper examines the voting behavior of women-led mutual funds. We find that women-led mutual funds are more likely to support environmental and social (ES) proposals, but not governance ones, and their voting support is more pronounced for proposals explicitly related to ES risks. Women-led mutual funds are more likely to vote with management in firms headed by female CEOs. They are also more likely to support female candidates in director elections, especially so when there is a shortage of female directors. Finally, women-led mutual funds are not more likely to follow ISS recommendations than other funds. Our results suggest that gender differences in fund management teams influence their voting behavior.

In extant work on information acquisition and governance, the value of information is related only to the impact of a shareholder’s vote on corporate policies. We consider a setting where shareholders can vote and trade. The incentives to acquire information are higher, but the opportunity to generate trading rents distorts voting incentives and reduces the quality of governance for any fixed level of information acquisition. These negative incentives are stronger when more voters are informed and eventually dominate the gains from more information acquisition by shareholders. As a result, the quality of firm governance is eventually decreasing in the fraction of shareholders that become informed. One takeaway is that concerns that proxy advisors may crowd out information acquisition and reduce governance quality seem overstated. Turning to the role of transparency, we show that if the market can only learn whether a motion passed as opposed to the exact voting tally, then opportunities to trade do not cause these distortions, and governance is dramatically improved. Accordingly, the analysis provides a rationale for reducing transparency in governance.

The equity lending and option markets both allow investors to decouple voting and cash flow rights of common shares. We provide a theory of this decoupling. While either market enables investors to acquire voting rights without cash flow exposure, empirical studies demonstrate a substantial difference in implied vote prices. Our model explains this surprising difference by showing that vote prices in the equity lending market are endogenously lower than those implied by the option market. Nonetheless, we show that even though votes are cheaper in the equity lending market, activists endogenously choose to decouple using both markets.

This paper develops a unified theory of blockholder governance and the voting premium. It explains how a voting premium emerges when a minority blockholder tries to influence the composition of the shareholder base, in a setting without takeovers and controlling shareholders. The model shows that empirical measures of the voting premium generally do not reflect the value of voting rights, and that the voting premium can be negligible even when the allocation of voting rights is important. Moreover, the model can explain a negative voting premium, which has been documented in several studies. It arises because of free-riding by dispersed shareholders on the blockholder's trades, which increases the price impact of trading voting shares and makes them less liquid than non-voting shares. The model also has novel implications for the relationship between the voting premium and the severity of conflicts of interest between shareholders, the price of a separately traded vote, and competition for control among blockholders.

I analyze the effects of bank competition on gender and racial gaps in entrepreneurship. Exploiting interstate bank deregulation from 1994 to 2021, I find that stronger bank competition increases the quantity and quality of banking services provided to minority borrowers. Developing a novel measure of discrimination using narrative information in the complaints filed with the Consumer Financial Protection Bureau, I show that bank competition reduces discrimination, loosening the financial constraints of female and minority entrepreneurs. Stronger bank competition also reduces the gender and racial gap in firm performance and business equity accumulation, fostering wealth equality and generating equitable economic growth.

We analyze, benchmark, and run randomized controlled trials on a panel of 7,463 U.S. entrepreneurs making incentivized sales forecasts. We assess accuracy using a novel administrative dataset obtained in collaboration with a leading US payment processing firm. At baseline, only 13% of entrepreneurs can forecast their firm’s sales in the next three months within 10% of the realized value, with 7.3% of the mean squared error attributable to bias and the remaining 92.7% attributable to noise. Our first intervention rewards entrepreneurs up to $400 for accurate forecasts, our second requires respondents to review historical sales data, and our third provides forecasting training. Increased reward payments significantly reduce bias but have no effect on noise, despite inducing entrepreneurs to spend more time answering. The historical sales data intervention has no effect on bias but significantly reduces noise. Since bias is only a minor part of forecasting errors, reward payments have small effects on mean squared error, while the historical data intervention reduces it by 12.4%. The training intervention has negligible effects on bias, noise, and ultimately mean squared error. Our results suggest that while offering financial incentives make forecasts more realistic, firms may not fully realize the benefits of having easy access to past performance data

We employ a dynamic search-and-matching model with bargaining between venture capitalists (VCs) and startups, utilizing two symmetric incentivized resume rating (IRR) experiments involving real US VCs and startups, to explain the matching outcome in the US entrepreneurial finance industry. Participants evaluate randomized profiles of potential collaborators, incentivized by the real opportunities for preferred cooperative partnerships. Using these experimental behaviors and real-world portfolio data as inputs to our structural estimation, we identify a significant impact of various human and non-human traits on equilibrium continuation values, matching likelihoods, and payoffs from matching for both startups and VCs. These traits include startups’ human assets (i.e., educational background, entrepreneurial experiences) and non-human assets (i.e., traction, business model), as well as investors’ human capital (i.e., entrepreneurial experiences) and organizational capital (i.e., previous financial performance, fund size). Results show that, while the total value of matching increases, the share of a startup/VC's payoff in the total value of matching diminishes substantially (in the range of .65 to .35) when the counterparty type becomes more attractive. Ultimately, we find that variations in the matching likelihood play a dominant role in explaining how the expected payoff from collaboration varies for startups and VCs when dealing with attractive and unattractive counterparty types.

Fluctuations in investor demand dramatically affect firms’ valuation and access to capital. To quantify their real impacts, we develop a dynamic investment model that endogenizes the demand- and supply-side of equity capital. Strong demand dampens price impacts of issuance, facilitating investment and financing, while weak demand encourages opportunistic repurchases, crowding out investment. We estimate the model using indirect inference by matching the endogenous relationship between investor demand and firm policies. Our estimation suggests that investor demand is an important driver of misallocation, compared with financial and real frictions and heterogeneous risk premia. Eliminating excess demand reduces dispersion in the marginal product of capital by 23.8% and productivity losses by 22.3%. With demand fluctuations, firms hold higher cash savings and tend to be larger—excess demand allows firms with financial market power to profit from financial market transactions, contributing to the emergence of superstar firms.

We present a search model that incorporates two key features of securities issuance markets: search for investors and information gathering. In the model, a seller contacts investors sequentially and uses the revealed interest to update the price of the security and to decide whether to terminate the search. We characterize the seller’s optimal strategy, which specifies how to structure the search, when to terminate the search, how to price the security, and how to allocate it to investors. We show how these choices are jointly determined and depend on the quality of investor information and search frictions. Our model provides unique predictions about offer outcomes, such as search length, security valuation, issue costs, underpricing, post-offer returns, and allocations. We find empirical support for these predictions in the setting of accelerated bookbuilt offers of seasoned equity, which involve simultaneous search and information gathering and which have become prevalent in recent years.

We present a model in which informed experts intermediate in the market for going public by acquiring private firms and reselling their shares to public investors. Because information incorporated by the public market generates resale pricing risk for experts, the acquisition prices they pay act as credible signals of firm value. Accordingly, intermediated sales provide a superior alternative for firms that expect to be undervalued in traditional IPOs. We characterize how signaling via the acquisition price affects the sharing of the surplus between the experts and the selling firms. We also analyze the co-existence of intermediated sales and IPOs and the efficiency of the resulting market equilibrium. Our analysis of intermediated sales sheds light on the possible informational roles of transactions such as SPACs and private equity investments.

I develop a dynamic agency model to investigate optimal managerial authority and its interaction with managerial compensation. The model shows that when hiring a manager, the principal delegates authority that is unresponsive to either the manager's outside options or the firm's recruitment costs, in contrast to promised compensation, which increases in both. Over time, both the manager's authority and his compensation rise after good performances and decline after bad realizations. Authority-performance sensitivity decreases as the manager's authority grows, resembling entrenchment. In contrast, pay-performance sensitivity increases with the manager's authority. If managerial authority can be adjusted only infrequently, the optimal contract may allow for self-dealing. Moreover, the model reveals that early-career luck plays a disproportionate role in determining the manager's authority and lifetime utility.

Corporate bonds include action-limiting covenants that may prevent the firm from undertaking valuable growth opportunities ex-post but are virtually impossible to negotiate. We study the covenant defeasance option, which effectively mitigates this inefficiency by allowing the firm to remove the covenants. Our model predicts and our empirical analysis confirms that (1) financially constrained firms with high uncertainty are more likely to include this option; (2) with the defeasance option, issuers are willing to accept more action-limiting covenants ex-ante; and (3) investors require lower yield on non-callable bonds and a higher yield on standard callable bonds that are defeasible.

Will asset managers with large amounts of capital and high risk bearing capacity hold large blocks and monitor aggressively? Both block size and monitoring intensity are governed by the contractual incentives of institutional investors, which themselves are endogenous. We show that when high risk bearing capacity arises via optimal delegation, funds hold smaller blocks and monitor significantly less than proprietary investors with identical risk bearing capacity. This is because the optimal contract enables the separation of risk sharing and monitoring incentives. Our findings rationalize characteristics of real world asset managers and imply that block sizes will be a poor predictor of monitoring intensity.