Career Concerns

  • 详情 Managerial Career Concerns and Informational Feedback Effects: Theory and Evidence
    We study the effect of managerial career concerns on informational feedback from stockmarkets. We set up a model in which managers with career concerns can learn information from their own information production or from stock price feedback. A key insight from the model is that if managerial career concerns are high, a less frictional market induces more information production by both managers and speculators. As a result, although price informativeness improves, managers learn less from the stock market, contrasting with the classical view in the literature on stock price feedback. Exploiting a quasi-natural experiment, we document evidence consistent with model predictions.
  • 详情 Punish One, Teach A Hundred: The Sobering Effect of Peer Punishment on the Unpunished
    Direct experience of a peer’s punishment might have a sobering effect above and beyond deterrence (information about punishments). We test this mechanism in China studying the reactions to listed state-owned enterprises’ (SOEs) punishments for fraudulent loan guarantees by firms in the same location or industry (peers) and non-peer firms, across SOEs and non-SOEs. After experiencing SOEs’ punishments, peer SOEs cut their loan guarantees by more than non-peer SOEs and peer non-SOEs, even if information is common to all firms. The reaction is stronger for peer SOEs whose CEOs have higher career concerns or face lower costs of cutting guarantees.
  • 详情 Reputation Concerns of Independent Directors:Evidence from Individual Director Voting
    Using a director-level dataset of board proposal voting by independent directors of public companies, we analyze the effects of career concerns and current reputation stock on independent directors in their voting behavior. Younger directors and directors in their second (and last) terms, who have stronger career concerns, are more likely to be aligned with investors rather than the managers. Their dissenting behavior is eventually rewarded in the market place in the form of more outside career opportunities. Directors with higher reputation stocks (measured by positive news media mentioning and the number of directorships) are also more likely to dissent. Finally, we find that career concerns are significantly stronger among directors who already enjoy higher reputation.