For articles eventually published in the top twenty academic finance journals and top-tier academic business journals, I examine the acceptance time (the time from first-round submission to final-round acceptance) and online/print publication times (the time from first-round submission to online/print publication). I find that the median acceptance times of the top five general-interest finance journals are: Journal of Financial Economics (9.9 months), Journal of Financial and Quantitative Analysis (10.6 months), Review of Finance (11.7 months), Review of Financial Studies (15.5 months), and Journal of Finance (19.8 months). The three fastest in finance are Review of Corporate Finance Studies, Review of Asset Pricing Studies, and Financial Management. Journal of Finance is one of the slowest top-tier business journals. Large and significant time differences support the editorial differences hypothesis. Received December 14, 2016; editorial decision December 22, 2016 by Editor Paolo Fulghieri.

In his groundbreaking work “Uncertainty, Evolution, and Economic Theory,” Armen Alchian (1950) suggests that survival is the real test of a firm's success. In this paper, I apply the survival test to the use of dual class share structures in the United States. Beginning with its original implementation by the International Silver Company in 1898 to the prevalence of dual class initial public offerings in 2013, I review the evolution and continued sustainability of the dual class structure in the United States. I contrast the structure with the failed use of tracking stocks and illustrate the structure's continued resilience alongside “competitive” anti-takeover devices such as poison pills, staggered boards, and supermajority voting requirements. Despite the external challenges from legislative bodies, shareholder rights groups, and institutional investors, the dual class structure has survived as an alternative means to raise capital for founders and/or controlling stockholders.

Abstract In this article, I propose a general-equilibrium model with proportional adjustment costs and industry-specific capital to study the firm migration phenomenon across market-to-book ratio. In my model, investors’ desire to diversify their portfolios and investment frictions generate a mean-reverting dynamics of Tobin’s q consistent with the probabilities of migration found in the data, and a non-linear pattern in the conditional volatility of Tobin’s q. In addition, since firms’ market-to-book ratios are function of the state of the economy and contain information about stock returns, stock prices inherit these properties, yielding asset-pricing implications in line with the empirical evidence, namely the value premium and a non-monotone relationship between the volatility of stock returns and the Tobin’s q.

Abstract We study risk-taking behavior in tournaments where the optimal strategy is to take no risk. By keeping the optimal strategy constant, while varying the competitiveness in the tournaments, we are able to investigate the relationship between competitiveness and excessive risk-taking. In the most competitive tournament, less than 10% of the subjects played the optimal strategy in the first rounds. The majority playing dominated strategies increased their risk-taking during game of play. When we removed feedback about winner’s decisions each round, and when we reduced the number of contestants in the tournaments, subjects significantly reduced their risk-taking.

Abstract I use a laboratory experiment to examine the productive and counterproductive effects of providing employees nonpecuniary recognition based on measures of relative performance. I find that, on average, recognition programs increase both productive efforts (those intended to increase one's own performance) and counterproductive efforts (those intended to decrease peer performance) in a setting where it is salient to employees that they can exert both productive and counterproductive efforts. Interestingly, I also find that these effects are moderated by the Dark Triad of personalities, a group of three personality traits. My study reveals that recognition programs mainly lead individuals who score lower on the Dark Triad to increase counterproductive efforts and those who score higher on the Dark Triad to increase productive efforts. These results contribute to the literature on relative performance information by demonstrating that recognition programs can have both productive and counterproductive effects. However, whether these programs produce mainly a productive or counterproductive effect depends on important personality characteristics of the employees.

Using a large sample of U.S. mortgages observed over the 2005–2009 period, we document contagion effects in strategic mortgage defaults. Strategic defaults result from borrowers choosing to exercise their in the money default option and our findings suggest this choice is influenced by the delinquency rate in surrounding zip codes (within a 5 mile radius), after controlling for other known determinants of mortgage default. These controls include a large array of borrower and loan characteristics, local demographic and economic conditions, spatial correlations, and changes in property values. Our findings that the local area delinquency rate is an important factor for strategic defaulters (borrowers that can be influenced in their decision) but not for defaults that are the result of inability to pay (borrowers that had no choice) lend support the contagion hypothesis. Our estimates suggest that a 1% increase in the local area delinquency rate may increase the probability of a strategic default by 7.25–16.5%.

In January 2006, federal regulators issued guidance requiring banks with specific high concentrations of commercial real estate (CRE) loans to tighten managerial controls. This paper shows that banks with concentrations in excess of the thresholds set in the guidance subsequently experienced slower growth in their CRE portfolios than can be explained by changes in bank or economic conditions. Moreover, banks above the CRE thresholds tended to have slower commercial and industrial loan growth but faster household loan growth following issuance of the guidance. The results highlight the potentially broad influence that portfolio-based macroprudential regulation might have on bank behavior.

Conditional cash transfer (CCT) programs innovate by conditioning transfers to poor families on investments in the human capital of children and other family members. The Mexican CCT program Progresa/Oportunidades began in 1997 and has served as a model for many of the now over sixty countries with CCTs around the world, in large part due to its initial evaluation with an experimental design and numerous follow-up studies. This article reviews the literature on the development, evaluation, and findings of Progresa/Oportunidades, summarizing what is known about program effects, taking into account corrections for multiple-hypothesis testing. ( JEL H23, I18, I28, I32, I38, O15)

Expert performance is often evaluated assuming that good experts have good outcomes. We examine expertise in medicine and develop a model that allows for two dimensions of physician performance: decision making and procedural skill. Better procedural skill increases the use of intensive procedures for everyone, while better decision making results in a reallocation of procedures from fewer low-risk to high-risk cases. We show that poor diagnosticians can be identified using administrative data and that improving decision making improves birth outcomes by reducing C-section rates at the bottom of the risk distribution and increasing them at the top of the distribution.

Performance share plans are an increasingly important component of executive compensation. They are equity-based, long-term incentive plans where the number of shares to be awarded is a quasi-linear function of a performance result over a fixed time period. We derive closed-form formulas for the value of a performance share plan when the performance measure is: (1) a non-traded measure following an Arithmetic Brownian Motion (e.g., earnings per share), (2) a non-traded measure following a Geometric Brownian Motion (e.g., revenue), or (3) a rank-order tournament of traded asset returns that are following Arithmetic Brownian Motions (e.g., percentile of ranked stock returns). Then we empirically test our valuation formulas. We find that our valuation formulas are more accurate for performance share plans based on earnings per share when forecasting using analyst consensus prior to the grant date. We also find that the efficiency of our valuation model greatly depends on the method used to forecast future firm performance. The policy implication is that FASB should consider requiring that grant date fair value be estimated using valuation formulas such as ours.