We show that stock prices of firms with gender-diverse boards reflect more firm-specific information after controlling for corporate governance, earnings quality, institutional ownership and acquisition activity. Further, we show that the relationship is stronger for firms with weak corporate governance suggesting that gender-diverse boards could act as a substitute mechanism for corporate governance that would be otherwise weak. The results are robust to alternative specifications of informativeness and gender diversity and to sensitivity tests controlling for time-invariant firm characteristics and alternative measures of stock price informativeness. We also find that gender diversity improves stock price informativeness through the mechanism of increased public disclosure in large firms and by encouraging private information collection in small firms.

This paper investigates the dynamics of individuals’ investments leading up to their decision to make the first investment abroad. We show that investors first invest in domestic securities and only some time later they invest abroad in foreign securities. We also show that investors who trade more often in the domestic market start to invest abroad earlier. Our findings suggest that the experience investors acquire while they trade in the domestic market is a key reason why active investors enter the foreign market earlier. A reason is that highly educated investors as well as investors with more financial knowledge, arguably those for whom learning by trading is the least important, do not need to trade as much in the domestic market before they start investing in foreign securities. Another reason is that investors who start investing in foreign securities are able to improve on their performance afterwards. This improvement in performance constitutes further evidence that the home country bias is costly.

We offer an explanation for the forward premium puzzle in foreign exchange markets based upon investor overconfidence. In the model, overconfident individuals overreact to their information about future inflation, which causes greater overshooting in the forward rate than in the spot rate. Thus, when agents observe a signal of higher future inflation, the consequent rise in the forward premium predicts a subsequent downward correction of the spot rate. The model can explain the magnitude of the forward premium bias and several other stylized facts related to the joint behaviour of forward and spot exchange rates. Our approach is also consistent with the availability of profitable carry trade strategies.

We consider a central puzzle surrounding CEO accountability: What explains the payoffs and penalties that CEOs receive? Invoking Fama's concept of "settling up," we examine how a CEO's entire performance record and history of prior over- or underpayment affect current pay and the odds of dismissal. We find that some parts of a CEO's historical track record work to remedy prior over- or underpayment, whereas other aspects result in greater imbalances, as rich CEOs get richer while poorer ones get poorer. History matters when boards reward or punish their CEOs, but such reckoning is relatively complex.

Minniti [Minniti, M., 2004. Entrepreneurial alertness and asymmetric information in a spin-glass model. Journal of Business Venturing 19 (5), 637–658; Minniti, M., 2005. Entrepreneurship and network externalities. Journal of Economic Behavior & Organization 57 (1), 1–27] argues that new venture creation decisions are interdependent and that the non-pecuniary network externalities and path dependencies of such decisions influence the geographic concentration of venturing activities. We apply her framework at the county level to study the association between prior and subsequent new venture creation in the U.S. Our findings indicate that there is a non-linear relationship between prior new venture creation and subsequent new venture creation, with venturing activities increasing at an increasing rate based on the amount of prior new venture creation.

Major League Baseball umpires express their racial/ethnic prefer ences when they evaluate pitchers. Strikes are called less often if the umpire and pitcher do not match race/ethnicity, but mainly where there is little scrutiny of umpires. Pitchers understand the incentives and throw pitches that allow umpires less subjective judgment (e.g., fastballs over home plate) when they anticipate bias. These direct and indirect effects bias performance measures of minorities downward. The results suggest how discrimination alters discriminated groups' behavior generally. They imply that biases in measured productivity must be accounted for in generating measures of wage discrimination. (JEL J15, J31, J44, J71, L83)

We examine the effect of corporate social responsibility (CSR) on the cost of equity capital for a large sample of US firms. Using several approaches to estimate firms’ ex ante cost of equity, we find that firms with better CSR scores exhibit cheaper equity financing. In particular, our findings suggest that investment in improving responsible employee relations, environmental policies, and product strategies contributes substantially to reducing firms’ cost of equity. Our results also show that participation in two “sin” industries, namely, tobacco and nuclear power, increases firms’ cost of equity. These findings support arguments in the literature that firms with socially responsible practices have higher valuation and lower risk.

Through a meta-analysis of 120 independent samples reported in 111 studies, we test the predictions of internalization theory in the context of the multinationality-performance relationship. Findings indicate that multinationality provides an efficient organizational form that enables firms to transfer their firm-specific assets to generate higher returns in international markets. In addition, the results delineate the conditions under which firm-specific assets have the strongest impact on the multinationality-performance relationship. Meta-analytic evidence also suggests that multinationality has intrinsic value above and beyond the intangible assets that firms possess, given analyses controlling for firms' international experience, age, size, and product diversification.

Abstract We examine the association of a venture capital (VC) firm’s reputation with the post-initial public offering (IPO) long-run performance of its portfolio firms. We find that VC reputation, measured by the past market share of VC-backed IPOs, has significant positive associations with long-run firm performance measures. While more reputable VCs initially select better-quality firms, more reputable VCs continue to be associated with superior long-run performance, even after controlling for VC selectivity. We find that more reputable VCs exhibit more active post-IPO involvement in the corporate governance of their portfolio firms, and this continued VC involvement positively influences post-IPO firm performance.

We investigate the organizational pursuit of seemingly impossible goals—commonly known as stretch goals. Building from our analysis of the mechanisms through which stretch goals could influence organizational learning and performance, we offer a contingency framework evaluating which organizations are positioned to benefit from such extreme goals and which are most likely to pursue them. We conclude that stretch goals are, paradoxically, most seductive for organizations that can least afford the risks associated with them.