+34 685 880 045
Address: Casado del Alisal 5,
Javier Suarez (Main advisor)
Curriculum Vitae [pdf]
Job Market Paper [pdf] [abstract]
I am joining CUNEF as an Assistant Professor starting in the 2018/2019 academic year.
My research interests cover the theoretical and empirical analysis of executive compensation and corporate governance. In particular, I study agency problems and their implications on accounting manipulation, managerial compensation and turnover, and corporate governance. I am also interested in banking, financial stability and regulation, and structural estimation.
Clawback provisions, executive pay and accounting manipulation [pdf] (JOB MARKET PAPER)
Clawback provisions allow shareholders to recover previously-awarded compensation from managers involved in accounting manipulation. I assess theoretically and empirically the effects of clawback provisions on the structure of managerial compensation and the frequency of accounting manipulation. Clawback provisions allow shareholders to recover previously-awarded compensation from managers involved in accounting manipulation. I develop a theoretical principal-agent model in which effort and manipulation incentives are at conflict. In the model, clawbacks and deferred compensation may become complement tools to deter manipulation when clawback enforcement is imperfect. I test the implications of the model using data from U.S. public firms in the 2002-2016 period. The identification of the effects of clawback adoption relies on an instrumental variables strategy that exploits exogenous cross-industry variation in clawback adoption. I find that those firms with greater pre-adoption reliance on vested (short-term) incentives increase the wealth-performance sensitivity of unvested (long-term) compensation. The results suggest that enforcement frictions are relevant. Moreover, clawbacks are complements with deferred compensation for firms where manipulation problems are severe, and monitoring over managers is less intense.How important are dismissals in CEO incentives? Evidence from a dynamic agency model [pdf]
I estimate a dynamic agency model to quantify the importance of dismissals in CEO incentives vis-à-vis pecuniary compensation. The model features endogenous dynamics in deferred and flow compensation, as well as exogenous departures, and endogenous dismissals after bad firm performance. Thus, the model functions as a classification device for CEO turnover events that exploits information from all the CEO departures in the data. I estimate the model via the Simulated Method of Moments, using data for CEOs in U.S. public firms appointed from 1993 to 2013. The results confirm that dismissal threats play a limited role in CEO incentives. The estimated CEO dismissal rate is 1.56 percent, and the CEO replacement cost represents 3 percent of firm assets, U.S.\$53 million in the median firm. Estimations across size and governance subsamples suggest that CEO dismissals are more important in small firms with worse governance. Technological frictions, rather than poor governance, seem to explain the infrequent dismissals. Moreover, deferred compensation alleviates two-thirds of the static agency costs.
Competition for talent and cyclical malpractice in corporate governance [Work in progress]
I present a model that rationalizes the pro-cyclicality of executive compensation and its relationship with fraud and malpractice in the U.S. banking sector. The model features a principal-agent problem where effort and misreporting incentives are at conflict and investors compete for managerial talent. Investors have access to a monitoring technology that reduces misreporting and has potential to reduce rent-extraction by managers. Competition for talent lowers the monitoring intensity applied to more talented managers, who end up enjoying higher levels of expected compensation through high-powered incentive pay. I show how an increase in industry profitability, a reduction in the market rate of return and an increase in top managerial talent jointly increase the aggregate intensity of fraudulent activities and the level of executive compensation.