ABSTRACT This paper examines how increased competition among environmental, social, and governance (ESG) rating agencies relates to ESG rating quality. We exploit the entry of Sustainalytics as a new ESG rating agency in 2010. We conduct a difference‐in‐differences analysis and provide three main findings. First, we find that higher competition decreases incumbents' ESG rating disagreements of the same scope. The negative relation between competition and ESG rating disagreement persists for same‐scope rating metrics not covered by Sustainalytics, suggesting that neither learning nor herding drive the results. The relationship between competition and rating disagreement strengthens for firms with more ESG disclosures, which generally require more effort to analyze. Second, we find that incumbents' ratings of ESG concerns are more strongly associated with future negative ESG news for firms additionally covered by Sustainalytics. This finding is consistent with competition improving ratings' ability to predict future negative ESG incidents. Third, we find that incumbents evaluate more difficult‐to‐measure outcome metrics for firms covered by Sustainalytics, consistent with competition inducing more effort. Overall, our findings suggest that competition serves as an implicit disciplining mechanism of ESG rating agencies' quality.

This study examines the long-term impact of social disaster experiences on household finance. Using the Cultural Revolution in China, the country’s most pronounced sociopolitical turmoil that completely disrupted millions of people’s lives, we show that households are more likely to participate in the stock market if their eldest member was more exposed to the turmoil. The results remain robust to alternative historical events, socioeconomic factors, and household characteristics. Survey results suggest that the more exposed individuals invest in the stock market because they perceive stocks as low risk rather than have altered risk preferences or trust in stock markets.

From 2008 to 2020, 180 of S&P 1500 have disclosed employee diversity targets. We conduct the first analysis of firms’ employee diversity targets and ask three research questions: (i) who announces diversity targets? (ii) do firms deliver on their diversity targets? (iii) what are the implications of disclosure of such targets for employee hiring and investors? We find that firms with a greater willingness (proxied by past ESG penalties, higher CEO-to-median employee pay ratio, more media coverage, and after #MeToo and Black Lives Matter movements) and ability (proxied by financial strength, a blue-collar heavy labor force, and gender and ethnic minorities on boards) to improve employee diversity are more likely to disclose diversity targets. Exploiting the Revelio dataset of 15,639 firm-years for 1,203 distinct firms from 2008 to 2020, we observe that firms that disclosed a diversity target have indeed hired more diverse employees, but such diversity levels had already increased substantially prior to the target disclosure. Firms with numerical, forward-looking, and rank-and-file employee-targeted goals are associated with greater employee diversity relative to firms that announce other types of diversity goals. Moreover, improved diversity performance does not appear to occur at the cost of employee quality, as measured by Revelio. Overall our results have practical implications for how investors and stakeholders might want to interpret corporate diversity targets.

ABSTRACT Upward influencers, employees who are more favorably perceived by their supervisors than their peers and subordinates, are predicted by economic and accounting theories and are found to be ubiquitous in many organizations. Despite their prevalence, the role of upward influencers in teams remains underexplored. This paper fills this void by using proprietary data from a service‐providing organization that allows for the identification of upward influencers based on its 360‐degree person evaluation. We find an inverted U‐shaped relationship between the fraction of upward influencers in a team and team performance. In cross‐sectional analyses, we show that this relationship is driven by conditions when the need for collaboration and information sharing is high and when managers are less experienced. Additional tests exploring the mechanisms for the role of upward influencers in teams suggest that they impair team horizontal relationships through lowering the willingness to communicate, share knowledge, and offer mutual assistance among team members. Yet, teams with upward influencers build better vertical relationships with supervisors, which, in return, is associated with supervisors allocating more of their time to provide team members with feedback and guidance. Taken together, this study contributes to the understanding of upward influencers in teams.

We report results from a randomized natural field experiment conducted in a restaurant dining setting to distinguish the observational learning effect from the saliency effect. We find that, when customers are given ranking information of the five most popular dishes, the demand for those dishes increases by 13 to 20 percent. We do not find a significant saliency effect. We also find modest evidence that the observational learning effects are stronger among infrequent customers, and that dining satisfaction is increased when customers are presented with the information of the top five dishes, but not when presented with only names of some sample dishes. (JEL C93, D83).

We report results from a large, randomized field to study how access to formal microinsurance affects production and economic development. We induce exogenous variation in insurance coverage at the village level by randomly assigning performance incentives to the village animal husbandry worker who is responsible for signing farmers up for the insurance. We find that promoting greater adoption of insurance significantly increases farmers' sow production, and this effect seems to persist in the longer run; moreover, the increase in sow production in response to the sow insurance does not seem to be the result of the substitution of other livestock.