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Alvaro Remesal
PhD candidate in Economics at CEMFI, Madrid (Spain).

In this website you can find updated versions of my CV and research projects, including my Job Market Paper.

Contact


Email:
remesal@cemfi.edu.es

Phone:
+34 685 880 045

 Address: Casado del Alisal 5,
28014 Madrid

References

Javier Suarez (Main advisor)
suarez@cemfi.es

 Andres Almazan
Andres.Almazan@mccombs.utexas.edu
 
Rafael Repullo
repullo@cemfi.es








Curriculum Vitae
[pdf]

Job Market Paper
[pdf] [abstract]


I will be on the job market in 2017/2018, available for interviews at the
2017 SAEe in Barcelona, and at the 2018 ASSA Annual Meetings in Philadelphia.



Research Interests


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.
 


Papers

Clawback provisions, executive pay and accounting manipulation [pdf] (JOB MARKET PAPER)

Clawback provisions allow shareholders to recover previously-awarded compensation from managers involved in earnings manipulation or misconduct. I develop a theory to rationalize the clawback adoption decision and to evaluate its impact on manipulation and the structure of managerial compensation. The theory features a principal-agent model in which effort and manipulation incentives are in conflict. I show that clawbacks reduce the manipulation incentives that arise from short-term compensation, but the possibility of a limited recovery can increase the optimal level of deferred compensation after the adoption. I provide empirical evidence for US public firms in the 2002-2016 period consistent with two implications of the model. First, I document that the wealth-performance sensitivity of vested compensation is higher when executives display a higher record of past earnings manipulation. Second, using an instrumental variables strategy, I find that clawbacks reduce the intensity of manipulation, but the reduction is smaller for firms with greater pre-adoption reliance on short-term incentives. These firms increase the wealth-performance sensitivity of unvested compensation, which suggests the relevance of enforcement frictions.

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. The model generates endogenous dynamics in deferred and flow compensation and functions as a classification device of CEO turnover events that can exploit information from all departures. I estimate the model via Simulated Method of Moments, using data for CEOs in US 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, US$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. Besides, deferred compensation provides most of CEO incentives, alleviating two-thirds of the static agency costs.
Manipulation waves [Work in progress]

I present a model of the relationship between accounting manipulation, executive compensation and industry profitability. The theory rationalizes the growth in accounting manipulation practices in periods of high industry profitability and the associated increases in managerial compensation. The model features a principal-agent model with manipulation where investors compete for managerial talent. Investors have access to a monitoring technology that reduces managerial rent-extraction from manipulation. Due to competitive pressures, monitoring is looser for more talented managers. Thus, the manipulation incentives are greater for talented managers, which translate into higher pay-for-performance and compensation. I show how an increase in industry profitability, a reduction in the risk-free rate and an increase in the span of control of managers can explain the existence of manipulation waves.