We examine the impact of lifetime work experience of top executives on mergers and acquisitions (M&As) behavior and outcome. Based on hand-collected data of top executives in a sample of Chinese firms during 2002–2018, we construct a generalist ability index of top executives to study the impact of generalist top executives (GTEs) vs. specialist top executives (STEs) on M&As. Our findings suggest that GTEs conduct more M&As than those of STEs. The results are robust to alternate specifications of M&A frequencies and after accounting for endogeneity issue. Furthermore, the M&A announcement and long-term returns are better for acquirers with GTEs than those with STEs. We attribute the findings to GTEs' ability of searching target ex ante, making the M&A process efficient, and fully leveraging their social networks post M&A. In addition, we find the increase in M&A activities in GTE firms are primarily due to GTEs' experience of M&As rather than their talents. Finally, the M&As from GTEs improve investment efficiency and are less likely to divest targets post M&As. In sum, GTEs conduct more M&As and they create value in the process.

Racial gap in corporate leadership has prompted continuous and intense discussions, motivating research into the conditions minorities face after they reach top management positions. We contribute to the ongoing debate in this area by examining the association between CEO race and compensation. We do not find evidence for a significant racial wage gap at the CEO level across various econometric specifications, including total-sample OLS, firm-fixed effects to capture CEO transitions within firm, propensity score matched sample, and instrumental variable analysis. The insignificant results hold for total compensation, cash compensation, and non-cash compensation. Further, there is no consistent evidence of differences in CEO compensation for any of the major racial groups (Blacks, Hispanics, and Asians). Based on our results, we conclude that racial minorities who make it to the CEO position in Corporate America are compensated at similar levels to their Caucasian counterparts.

Abstract Publicly listed firms respond to capital supply conditions shaped by local investing preferences. Public firms headquartered in areas with higher proportions of senior citizens and women use more debt financing. These demographics are associated with conservative investing, leading to a higher and more stable local supply of debt capital. The demographics–leverage relation is more pronounced for firms that cannot easily tap public bond markets, which is the majority of public firms. Changes in firms’ financing activities around exogenous shocks to credit supplies, including interstate banking deregulation and the 2008–2009 financial crisis, support the local capital supply hypothesis.

Using a comprehensive dataset of orders and trades in the Indian government bond market, this study presents new evidence on the effect of funding liquidity on market liquidity. We find no evidence that lower short-term interest rates – the key instruments of monetary policy – boost market liquidity. However, consistent with models that stress the role of intermediary capital, we find that market liquidity measures have a strong, positive association with short-term borrowing by primary dealers. We provide additional evidence linking these firms’ borrowing to their balance sheet strength and secondary market participation. The results suggest that localized funding conditions specific to marginal suppliers of intermediation services are more important for market liquidity than the broader economy-wide funding environment.

This paper examines the long-run economic consequences of Russian serfdom. Employing data on the intensity of labor coercion just prior to emancipation in 1861, we document that a 25 percentage point increase in historical serfdom (1 SD) reduces household expenditure today by up to 17%. We then provide evidence on the persistence of this relationship by studying city populations over the period 1800 to 2002. Exploring mechanisms, our findings suggest that less urban agglomeration and slower industrial development in areas with a greater degree of serfdom perpetuated the negative effects of forced labor before, during, and after the Soviet period.

Abstract We study the dynamics of cash-and-carry arbitrage using the U.S. crude oil market. Sizable arbitrage-related inventory movements occur at the New York Mercantile Exchange (NYMEX) futures contract delivery point but not at other storage locations, where instead, operational factors explain most inventory changes. We add to the theory-of-storage literature by introducing two new features. First, due to arbitrageurs contracting ahead, inventories respond to not only contemporaneous but also lagged futures spreads. Second, storage-capacity limits can impede cash-and-carry arbitrage, leading to the persistence of unexploited arbitrage opportunities. Our findings suggest that arbitrage-induced inventory movements are, on average, price stabilizing.

This paper analyzes the effects of the lower bound for interest rates on the distributions of inflation and interest rates. In a New Keynesian model with a lower bound, two equilibria emerge: policy is mostly unconstrained in the “target equilibrium,” whereas policy is mostly constrained in the “liquidity trap equilibrium.” Using options data on interest rates and inflation, we find forecast densities consistent with the target equilibrium and find no evidence in favor of the liquidity trap equilibrium. The lower bound has a sizable effect on the distribution of interest rates, but its impact on inflation is relatively modest. (JEL E12, E23, E31, E43, E52, G13)

Abstract Passively managed index funds now hold over 30% of U.S. equity fund assets; this shift raises fundamental questions about monitoring and governance. We show that, relative to active funds, index funds are less effective monitors: (a) they are less likely to vote against firm management on contentious governance issues; (b) there is no evidence they engage effectively publicly or privately; and (c) they promote less board independence and worse pay-performance sensitivity at their portfolio companies. Overall, the rise of index funds decreases the alignment of incentives between beneficial owners and firm management and shifts control from investors to managers.

Abstract We study default effects in the context of a residential electricity-pricing program. In the large-scale randomized controlled trial we analyse, one treatment group was given the option to opt-in to time-varying pricing while another was defaulted into the program but allowed to opt-out. We provide dramatic evidence of a default effect on program participation, consistent with previous research. A novel feature of our study is that we also observe how the default manipulation impacts customers’ subsequent electricity consumption. Passive consumers who did not opt-out but would not have opted in—comprising more than 70% of the sample—nonetheless reduce consumption in response to higher prices. Observing of this follow-on behaviour enables us to assess competing explanations for the default effect. We draw conclusions about the likely welfare effects of defaulting customers onto time-varying pricing.

ABSTRACT Does accounting regime play a role in the well-documented phenomenon of overbidding in M&As? The 2001 regulatory change from a goodwill amortization to a non-amortization regime (SFAS 142) affords us a quasi-experimental setting for testing the consequences of M&A accounting rules for acquirers' bidding decisions. Relying on a novel approach to modeling optimal bidding, our primary finding indicates a significant increase in overbidding in the post-2001 period, suggesting that M&A accounting has real consequences for bidding decisions, and that this result is robust to a battery of sensitivity tests. In addition, supplementary tests show that overbidding is more pronounced in pooling versus purchase transactions, and that the accounting regime's implications for overbidding and acquisition premium are distinct. Overall, our findings shed light on the role accounting plays in shaping managerial decisions—and, ultimately, shareholder wealth—in an important corporate setting. They may thus inform researchers, corporate boards, and standards setters. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G34, M41.