Firms with narcissistic CEOs are more likely to experience the turnover of non-CEO executives; this effect is amplified for executives with pay closer to the CEO’s pay. Stock price reactions to narcissism-induced departures are more negative the longer the non-CEO executive’s tenure. If long-tenured non-CEO executives have more valuable human capital, the results imply a relation between CEO narcissism and the loss of valuable human capital. We find parallel results for mass layoffs of non-executive, rank-and-file employees. Our findings imply that CEO narcissism impacts firm value through its effect on the retention of valuable human capital.
Presentations: Louisiana State University, Texas A&M University
I test for causal spillover effects of creditor control following loan covenant violation using a hierarchical matching estimator that is new to the finance literature. Other estimation approaches (e.g. regression discontinuity) explicitly assume away spillover effects, and produce biased estimates when spillovers are present. I find that firms increase debt issuance and investment in response to rival firm covenant violation, and that these firms experience an increase in sales growth. Because causal identification is limited to non-violating rival firms who were just as likely to violate a covenant, this effect is novel from the “deep-pocket” mechanism in the earlier literature.
Presentations: Louisiana State University, Texas A&M University, Texas Tech University, University of Melbourne, University of Sydney
I study labor market outcomes for, and monitoring activities by, corporate directors following a data breach. These directors lose shareholder support at hacked firms, but not at interlocking firms. The interlocking firms exhibit better cybersecurity risk monitoring after the breach, and hack-experienced directors receive more appointments at larger, better-governed firms following the event. The results suggest that, at least when the supply of a specific skill is particularly sparse, learning on the job following a crisis can dominate the stigma of failing to prevent that crisis in the labor market for corporate directors.
Presentations: FMA 2018 Annual Meeting, Louisiana State University, Texas A&M University