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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 am 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 accounting manipulation. I assess theoretically and empirically the effects of clawback adoption on the structure of managerial compensation and the frequency of accounting manipulation. I develop a theoretical principal-agent model in which effort and manipulation incentives are in conflict. First, I show that the performance sensitivity of short-term pay is higher when shareholders tolerate earnings manipulation. Second, clawbacks and deferred compensation may become complementary tools to deter manipulation when clawback enforcement is limited. I provide empirical evidence for US public firms in the 2002-2016 period that is consistent with the implications of the model. First, I find that the wealth-performance sensitivity of vested compensation is higher when executives display a higher record of past earnings manipulation. Second, exploiting exogenous cross-industry variation in clawback adoption, I find that clawbacks reduce the intensity of manipulation, with the reduction being smaller for firms with greater pre-adoption reliance on short-term incentives. These firms increase the wealth-performance sensitivity of unvested compensation, which suggests that clawbacks and deferred compensation are complementary and that enforcement frictions are relevant.
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 the 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. Estimation across size and governance subsamples suggest that CEO dismissals are more important in small firms with worse governance. Moreover, deferred compensation provides most of CEO incentives, alleviating two-thirds of the static agency costs.

Fraudulent cycles
[Work in progress]


I present a model to rationalize the pro-cyclicality of executive compensation and its relationship with fraudulent and misreporting activities. The model features a principal-agent setting where effort and misreporting incentives are at conflict and investors compete for managerial talent. Investors have access to a monitoring technology that allows reducing the rent-extraction of the manager, but competitive pressures for talent drive down monitoring for more talented managers, who enjoy higher levels of expected compensation through high-powered incentives. 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.