We empirically examine bank CEOs’ compensation. We find that bank CEOs (a) are paid less than their nonfinancial counterparts, an effect driven by the CEOs of small bank; (b) experienced declining compensation during 2007–2009 (the hardest-hit banks cut compensation more) but pay is now 24% higher than precrisis levels; (c) are paid more at larger banks, those with less nonperforming loans, those with a higher proportion of noninterest income, and those with less demand-deposit dependence; and (d) have pay highly sensitive to ROA and ROE, but not stock returns. Tail risk is higher when compensation depends more on short-term measures of performance. (JEL, F34, G32, G33, G38, K42)

Whether an inversion is associated with weaker firm governance is an open empirical question. While many inversions happen to countries that offer weaker protection to minority shareholders than the U.S., most firms that invert continue to be treated by the SEC as an “U.S. issuer”, and thus, their shareholders benefit from the full protection offered by the U.S. Federal Securities Laws. Our analysis shows that firms that invert exhibit an increase in their stock illiquidity, information asymmetries, and a decrease in their institutional shareholdings, indicating a weaker market-based governance following the inversion. Executives also receive a smaller proportion of equity-based compensation and their wealth is less sensitive to stock prices following the inversion. Thus, despite enjoying the full protection of federal securities laws, investors perceive inverted firms to have weaker governance relative to comparable U.S. firms.

We show that firms take more (but not necessarily excessive) risks when one of their directors experiences a corporate bankruptcy at another firm where they concurrently serve as a director. This increase in risk-taking is concentrated among firms where the director experiences a shorter, less-costly bankruptcy and where the affected director likely exerts greater influence and serves in an advisory role. The findings show that individual directors, not just CEOs, can influence a wide range of corporate outcomes. The findings also suggest that individuals actively learn from their experiences and that directors tend to lower their estimate of distress costs after participating in a bankruptcy firsthand.

We use administrative payroll data to estimate the effect of the minimum wage on employment and wages. We find that both effects are nuanced. While the overall number of low-wage workers in firms declines, incumbent workers are no less likely to remain employed. We find that firms reduce employment primarily through hiring, and there is significant heterogeneity across the nontradable and tradable sectors. For wages, we find modest spillovers extending up to $2.50 above the minimum wage. Spillovers accrue to both incumbent workers and new hires, but only within firms that employ a significant fraction of low-wage workers.

ABSTRACT We examine the extent to which deferred vesting of stock and option grants (deferred pay) helps firms retain executives. To the extent an executive forfeits all deferred pay if they leave the firm, deferred vesting will increase the cost (to the executive) of an early exit. The impact of deferred pay on executive retention, a key ingredient for firms to create shareholder value is hence an important empirical issue. Using pay duration proposed in Gopalan et al. (2014) as a measure of the extent of deferred equity, we find that CEOs and non‐CEO executives with longer pay duration are less likely to leave the firm voluntarily. The talent retention role of deferred pay is mitigated by performance‐vesting provisions and signing bonuses offered by industry peers. Moreover, we also find that voluntary turnover is less sensitive to pay duration for executives who are perceived to be more talented and have more firm‐specific skills. Overall, our study highlights a strong link between compensation design and turnover of top executives. It suggests that firms take into account the need for retaining managerial talent in designing executive compensation.

Using detailed data for U.S. homeowners, we document a negative, nonlinear relation between the loan-to-value ratio (LTV) of homeowners’ primary residence and their labor income. Consistent with high LTV individuals experiencing constrained mobility, we find stronger effects among subprime, liquidity- constrained individuals and those living in regions with limited alternative local employment opportunities and strict noncompete law enforcement. Though high LTV individuals are less likely to move across MSAs, they are more likely to change jobs without changing their residence. We find no effects among similar neighboring renters employed at the same firm and with a similar job tenure.