CEO contractual protection and debt contracting

Chief Executive Officer (CEO) contractual protection, in the forms of CEO employment agreements and CEO severance pay agreements, is prevalent among S&P 1500 firms. While prior research has examined the impact of these agreements on corporate decisions from shareholders’ perspective, there is little research on the impact from debt holders’ perspective. We find that, compared with other loans, loans issued by firms with CEO contractual protection on average contain more performance covenants and performance-pricing provisions. This effect increases with CEOs’ risk-taking incentives and opportunities, but it decreases with CEOs’ preference for and opportunity of enjoying a quiet life. Furthermore, for loans issued by firms with CEO contractual protection, debt holders include stricter covenants, charge a higher interest rate and use a more diffuse syndicate structure. Collectively, these results shed light on the impact of CEO contractual protection on debt contracting.     

To make or to buy from a common supplier? Strategic considerations and welfare consequences

Consider two downstream firms that each can either produce an input in-house or purchase it from an upstream supplier. We show that depending on the difference between the supplier's and the downstream firms' in-house production costs, outsourcing by both firms could help them achieve a Pareto improvement or leave them trapped in a prisoner's dilemma. Furthermore, we find that two downstream firms may play a chicken game in which each makes a sourcing decision different from its rival if the input supplier is not as efficient as in the previous cases. The welfare implications of various sourcing outcomes are explored.     

Equal Pay for Equal Task: Assessing Heterogeneous Returns to Tasks across Genders

We inspect the heterogeneous association between tasks and wages across genders using individual-level data on U.S. workers. Our findings suggest that women receive a higher wage premium when engaged in cognitive tasks and experience more contained wage losses when performing manual activities. However, a wage penalty characterizes women engaged in highly social intensive jobs. Further inspection reveals that this result is especially driven by the teamwork component of social activities.