Research

Working papers

• Human Capital, Competition and Mobility in the Managerial Labor Market
  with Noah Lyman and Lin Zhao
  June 2025
  ssrn
  
  Abstract

  We pose a structural model of the managerial labor market with general and firm-specific human capital accumulation, managerial bargaining power, and imperfect labor market competition. Empirically, firm-specific human capital is an important driver of wage growth over tenure and experience; it also quantitatively restricts mobility and can help explain the low rate of external CEO hiring. We decouple bargaining power from labor market competition in determining managerial rent extraction, with the latter forming a significant portion, particularly for poached CEOs. We show that firm-specific skill accumulation shapes the dynamics of rent extraction: by raising match-specific productivity between the firm and manager, it increases growth in managerial rent extraction over tenure but lowers it over experience.
• Shareholder Voice and Executive Compensation
  December 2024
  ssrn
  
  Abstract

  I estimate a model of CEO compensation with non-binding shareholder approval votes (Say-on-Pay). The Board sets compensation and (relative to shareholders) may prefer high total pay; shareholders can fail the vote and punish the Board for high pay. Failed votes are perceived as costly by the Board and shareholders: Say-on-Pay resembles a costly punishment mechanism, raising firm value by 2.4% on average, despite only 7% of votes failing. I analyze a counterfactual binding vote: failure binds pay to prior levels, which may not reflect current information about CEO ability. The failure rate falls, pay levels increase and firm value decreases.
• Hurdle Rate Buffers and Bargaining Power in Asset Acquisition
  with Bruce Carlin, Alan D. Crane and John R. Graham
  July 2025
  ssrn
  conditionally accepted at Journal of Financial Economics
  previously circulated as Project Development with Delegated Bargaining: The Role of Inflated Hurdle Rates
  
  Abstract

  CFOs report using elevated hurdle rates that average 6.6 percentage points above the cost of capital. We show that hurdle rate buffers act as a commitment device and convey a bargaining advantage over counterparties during project development and M\&A. This benefit can exceed the opportunity cost of forgone projects and acquisitions, preserving firm value. Consistent with our model, bidders’ elevated hurdle rates in M\&A deals associate with higher surplus capture ex post; in CFO survey data, hurdle rate buffers negatively relate to ex ante bargaining power, and realized returns cluster just above elevated hurdle rates.

Publications

• Corporate Flexibility in a Time of Crisis
  with Murillo Campello, John R. Graham and Yueran Ma
  Journal of Financial Economics, June 2022
  internet appendix; published version; ssrn; github repo
  
  Abstract

  We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a central role in determining firms’ employment plans during the health crisis; ii) investment flexibility allows firms to increase or decrease capital spending based on their business prospects in the crisis, with effects shaped by workplace flexibility; and iii) financial flexibility contributes to stronger employment and investment, in particular when fixed costs are high. While the role of workplace flexibility is new to the COVID crisis, CFOs expect lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms rely more on automation to replace labor.