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We provide measures of absolute and relative equity agency costs for corporations under different ownership and management structures. Our base case is Jensen and Meckling's (1976) zero agency-cost firm, where the manager is the firm’s sole shareholder. Utilizing a sample of 1,708 small corporations from the FRB/NSSBF database, we find evidence supporting(More)
We find that innovative efficiency (IE), patents or citations scaled by research and development expenditures, is a strong positive predictor of future returns after controlling for firm characteristics and risk. The IE-return relation is associated with the loading on a mispricing factor, and the high Sharpe ratio of the Efficient Minus Inefficient (EMI)(More)
The study examines how 166 U.S. banks compensated their top management teams (top 4-5 executives in each bank) during 1993-1996. We observe two tiers of compensation in the executive suite: CEO and the rest. CEOs are paid more, especially in performance contingent compensation. The weight of base salary in CEO’s pay is significantly lower than in other(More)
We study a known negative signal, the sale of insider shares in an IPO and find that insiders adopt two concealment strategies consistent with wealth-maximizing behavior. First, insiders underreport the number of personally owned shares in the prominent original prospectus and use an obscure amendment to communicate the true higher level of shares to be(More)
This paper shows the relation between CEO ownership and firm valuation hinges critically on the strength of external governance (EG). The relation is hump shaped when EG is weak, but is insignificant when EG is strong. The results imply that CEO ownership and EG are substitutes in mitigating agency problems when ownership is low. However, very high levels(More)
Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value? The role of government shareholding in corporate performance is central to an understanding of China’s newly privatized large firms. In this paper, we analyze shareholders as agents that can both harm and benefit companies. We examine the ownership structure of(More)