This study is the first to link managerial turnover to mutual fund managerial structure in a manner that indicates the strong presence of a conflict of interests between investors and fund sponsors in an area of fund governance where we have been led to believe there are strong and well-functioning mechanisms to guard against the exploitation of investors. I utilize the unique characteristics of mutual funds where managers sometimes manage multiple “firms” simultaneously, something not generally observed in industrial firms. I test the governance mechanisms using the mutual fund complexes management structure; unitary and multiple fund management (UFM and MFM). This study shows that UFMs tend to have higher asset growth rates and higher fees than MFMs, suggesting that sponsors can benefit more from keeping them intact. I find that changing managers under the UFM is more costly to sponsors making them more reluctant to fire poor performers. I document that underperforming UFM are −2.77% less likely to be replaced than their underperforming MFM counterparts. In addition, the conflict of interests affect the replacement decision, as high expense ratio fund managers have a lower probability of replacement for a given level of underperformance.

This paper investigates the relationship between a firm′s loan commitment demand and its overall capital structure. I develop a model which demonstrates that a loan commitment leads a firm to higher privately optimal debt level and a lower cost of debt funds; these results are driven by the loan commitment′s ability to attenuate the potential moral hazard problems attendant upon debt financing. I confront the predictions with cross-sectional data, and find that the availability of unused loan commitment financing is positively related to firm leverage and negatively related to cost of debt funds. Journal of Economic Literature Classification Numbers: D82, G21, G32.

Abstract Using euro conversion as the trigger, we examine what drives volume and spread changes when stock exchanges compete. Results show average trading costs on European exchanges decrease almost 9%, and turnover increases over 30%. Trading costs decline or remain unchanged on all exchanges, but volume deteriorates in some markets and improves in others. Frankfurt, Paris, London, and Milan are winners, while Madrid and Brussels lose volume. We examine the role of the spread-volume relation, firm characteristics, exchange trading rules, and country-level factors in determining these outcomes. Results suggest that euro conversion prompted competition by increasing transparency in market prices.

Companies are sometimes accused of misleading the market. The SEC can punish this with enforcement actions. Alternatively, shareholders can seek redress through a shareholder class action (SCA). Thus, using a sample of 416 securities class actions, this paper shows that SCAs are a catalyst to promote disciplinary takeovers, CEO turnover and pay-cuts, and harm CEOs’ future job-prospects.

A structural econometric model of retirement of dual-career couples is specified and estimated with panel data from the National Longitudinal Survey of Mature Women. A coincidence of spouses retiring together, despite the younger ages of wives, suggests explicit efforts at coordination. The estimates suggest that one reason is a correlation of tastes for leisure. More important, each spouse, and perhaps husbands in particular, values retirement more once their spouse has retired. The opportunity set accounts for peaks in the retirement hazards of each spouse individually, but not for peaks in the simultaneous retirement of both spouses. Copyright 2000 by University of Chicago Press.

This article formulates a general equilibrium model for analyzing the youth labor market. At the heart of the model is an interplay between a labor force with heterogeneous ability levels and a minimum wage restriction. Ability affects performance on skilled jobs and, to a lesser extent, on unskilled jobs. Workers are less productive as youths than as adults. The model is applied to rationalize several results from available studies and to analyze the effects of three representative policies: a youth subminimum wage, subsidies paid to firms that hire youths, and subsidies that offset the costs of on-the-job training.

A structural life-cycle retirement model with an improved specification over previous models is used to analyze and compare the long-run effects on the labor supply of older workers of the 1983 Social Security reforms. The effects of separate provisions from the 1983 amendments are examined. These include the raising of the normal retirement age to 67, the increase in the delayed retirement credit to 8%, and the lowering of the reduction rate for earnings over the test amount to $1.00 for every $3.00 of earnings.

Abstract We examine the relative importance of observed and unobserved firm- and manager-specific heterogeneities in determining executive compensation incentives and firm policy, risk, and performance. First, we decompose executive incentives into time-variant and time-invariant firm and manager components. Manager fixed effects supply 73% (60%) of explained variation in delta (vega). Second, controlling for manager fixed effects alters parameter estimates and corresponding inference on observed firm and manager characteristics. Third, larger CEO delta (vega) fixed effects predict better firm performance (riskier corporate policies and higher firm risk). These results suggest that the delta (vega) fixed effect captures managerial ability (risk aversion). (JEL G3, G32, G34, J24, J31, J33) Received September 7, 2018; editorial decision February 21, 2020 by Editor Andrew Ellul.

Abstract. This article examines the impact of one form of sales seasonality on the response of equity returns to earnings announcements in different quarters. We regress unexpected announcement period returns on unexpected earnings and compare the results for seasonal firms—those with sales consistently concentrated in the same quarter each year—to those of other firms. For seasonal firms, we find robust evidence of a greater regression intercept and some evidence of a greater earnings response coefficient in peak sales quarters than in nonpeak quarters. These results are consistent with a greater resolution of the uncertainty about seasonal firms' prospects in their peak sales quarters than in other quarters. Our evidence also shows that fourth‐quarter earnings announcements have smaller stock price response coefficients than do interim announcements. Some prior has found smaller fourth‐quarter earnings response coefficients for small but not large firms. We find some evidence that fourth‐quarter earnings response coefficients are smaller than interim‐quarter response coefficients for large firms as well as for small firms. This suggests that explanations for smaller fourth‐quarter earnings response coefficients need to be applicable to both large and small firms. Résumé. Les auteurs examinent, pour différents trimestres, l'incidence d'une forme de caractère saisonnier des ventes sur la réaction du rendement des actions aux déclarations de bénéfices. Ils effectuent une analyse de régression des rendements imprévus des trimestres par rapport aux bénéfices imprévus et comparent les résultats obtenus dans le cas des entreprises dont les activités sont saisonnières—c'est‐à‐dire dont les ventes sont systématiquement concentrées dans le même trimestre chaque année—aux résultats obtenus dans le cas des autres entreprises. Dans le cas des entreprises dont les activités sont saisonnières, les résultats de l'analyse démontrent vigoureusement que l'intersection de la régression est supérieure et confirment avec moins de fermeté que le coefficient de réaction aux bénéfices déclarés est supérieur pour les trimestres où le volume des ventes culmine, par rapport aux autres trimestres. Ces résultats permettent de conclure à une plus grande résorption de l'incertitude relative aux perspectives des entreprises dont les activités ont un caractère saisonnier dans les trimestres où les ventes de ces entreprises culminent que dans les autres trimestres. Les résultats de l'analyse démontrent également que les déclarations de bénéfices au quatrième trimestre donnent lieu à des coefficients plus faibles de réaction du cours des actions que les déclarations des trimestres intermédiaires. Certains travaux antérieurs ont établi que les coefficients de réaction aux déclarations de bénéfices du quatrième trimestre étaient plus faibles pour les petites entreprises que pour les grandes. L'analyse des auteurs tend ici à démontrer que les coefficients de réaction aux déclarations de bénéfices du quatrième trimestre sont plus faibles que les coefficients de réaction des trimestres intermédiaires pour les grandes entreprises aussi bien que pour les petites entreprises. Ces constatations donnent à penser que les facteurs qui expliquent les coefficients de réaction plus faibles aux déclarations de bénéfices du quatrième trimestre devraient pouvoir s'appliquer tant aux grandes qu'aux petites entreprises.