In contrast to the “lazy prices” phenomenon in the stock market, more 10-K textual changes lead to larger increases in volatility smirks—consistent with options traders buying more out-of-the-money put options based on negative information disclosed in textual changes. Moreover, the lazy-prices effect is mainly driven by stocks with tradable options, suggesting that limits to arbitrage lead to a delayed response of stock prices. Finally, the return predictability of textual changes is stronger for stocks with larger option volatility smirk changes. Sophisticated options traders, therefore, demonstrate superior skills at extracting relevant information from public filings.

We construct a measure ( fLMA ) of the extent to which neighboring firms hire similar types of workers, based on the similarity between the labor profile of a firm and that of its locality. We show that a firm’s innovation is positively related to fLMA. The enhanced labor mobility induced by higher fLMA is an important channel for this positive relation. This relation is stronger when firms have increased outside job opportunities for employees, increased knowledge spillovers via coworkership, and more employee stock options. Innovation is higher when intellectual property ownership is with employers, not employees. This effect increases in fLMA.

This article shows that when a compensation peer firm experiences a significant failure in its say-on-pay (SOP) voting, the focal firm’s stock price is adversely affected, resulting in reduced CEO pay in the subsequent period. This pay-reduction effect is amplified when the board is more powerful, when proxy advisors express concerns about CEO pay, and when the compensation consultant lacks quality. Directors who react to the price drop and cut the CEO’s pay receive higher votes in future director elections, implying a market feedback effect for directors of the focal firm triggered by their peers’ SOP voting failure.

This study investigates the adoption and implications of Accounting Standards Codification (ASC) 842 lease accounting standards in private loan contracts. Analyzing a comprehensive sample of material loan contracts from 2011 to 2023, we document a pervasive reluctance to adopt ASC 842. Specifically, we find that for loans issued prior to, but maturing after, the standard effective date, only 41% of loans adopt the standard. For loans issued after the standard effective date, only 46% of loans adopt the standard. Our determinants analyses reveal that for loans issued prior to the effective date, the reluctance to adopt ASC 842 is associated with (1) a preference for using consistent lease classifications over time, (2) concerns about borrower opportunism, and (3) the costs of negotiating or renegotiating lease‐related loan terms within lending syndicates. In contrast, for loans issued after the effective date, only negotiation costs are associated with the reluctance to adopt. Our findings suggest that the costs of adopting ASC 842 in private loan contracts often outweigh the benefits and that contracting parties prefer a stable accounting standard environment.

Addressing income inequality is crucial for ensuring equitable and prosperous societies. This study examines the impact of the local press on intrafirm pay disparity. By using recently mandated disclosures of CEO-worker pay ratios and analyzing the staggered shutdown of local newspapers, we find that within-firm pay disparity increases by 8.2 percent following local newspaper closures. Further analysis suggests that this post-closure increase in pay disparity ratio is unlikely to be driven by either CEO compensation or worker pay alone or underlying economic conditions but instead reflects reduced concerns over reputational damage. Overall, our findings are consistent with local newspapers’ playing an important role in disseminating CEO-worker pay ratios and amplifying their reputational effects, thereby shaping and monitoring within-firm pay disparity. Data Availability: Data used in this study are available from public sources identified in the paper.

We conduct two experiments to examine whether and how the framing (bonus vs. penalty) of a target‐based incentive contract affects knowledge sharing and knowledge seeking. In the first experiment, we predict and find that penalty‐framed contracts increase employees' stress due to the fear of potential loss, which in turn reduces their willingness to share knowledge. Additionally, consistent with loss aversion, employees under penalty‐framed contracts are more likely to seek knowledge than those under bonus‐framed contracts. The second experiment corroborates our theoretical arguments by demonstrating the crucial role of stress in reducing knowledge‐sharing behavior. The results show that, when stress is alleviated through an informal control mechanism, penalty‐framed contracts no longer reduce knowledge sharing. The implications of our findings for research and practice are discussed.

Despite the potential of algorithms to improve judgment quality, recent research suggests that individuals may be averse to algorithmic use. We experimentally examine whether and how managers’ use of an algorithm-advised performance rating is influenced by rating valence and the decision rights managers have to adjust the algorithm. We find that managers are less willing to use an algorithm to evaluate subordinate performance when it advises a low, rather than high, rating. We further show that when the algorithm-advised rating is low, allowing managers to adjust how the algorithm computes the rating, compared with adjusting the rating itself or not allowing any adjustment, increases algorithmic use. Further analyses show this effect to be consistent with managers’ increased understanding of an algorithm when involved in its computation. Our findings inform organizations’ implementation of performance evaluation algorithms by showing how rating valence and decision rights jointly influence managers’ use of the algorithms.