Lobbying Congress versus Agencies (with Ekaterina Volkova)
Consistent with Congress and government agencies overseeing distinct parts of the regulatory process, companies lobby both. Companies redirect lobbying across agencies in response to agency actions, a form of short-term investment in political influence that complements congressional lobbying. Targeting a bill and its related rules yields higher benefits than lobbying only on the bill; this complementarity is greatest among technical issues. Channels underlying this value include agency power, as proxied by overturning of Chevron, and lobbyist skill. Compared to lobbying Congress, 'what you know' is more important than 'who you know'. Shocks to firm-agency lobbying relationships suggest findings are causal.
Optional shareholder voting (with Peter Iliev)
Mutual funds are required to vote, but shareholder voting is optional for institutional managers (IMs), a category that includes activists, hedge funds, and private wealth. Only 44% of IMs vote on firms’ say-on-pay policies. However, the dollar value of their shares voted is twice that of mutual funds. IMs’ voting differs significantly from mutual funds: IMs’ support for management is 5 percentage points greater among small positions, but 4 percentage points lower among large positions. The differences arise from: (1) small IMs’ tendency to either not vote or simply be friendly toward management vs. mutual funds’ tendency to follow ISS recommendations; (2) large IMs’ tendency to monitor firms via voting more intensely. These differing strategies are observable at the underlying firm level.
Best Paper Prize, Toronto Corporate Governance Conference
Equal job, Unequal Pay? Evidence from 4 Million Regulatory Careers (with Joseph Kalmenovitz and Billy Xu)
Using a novel dataset covering 36.5 million employee-year observations across 334 government agencies from 1973–2023, we document persistent and widespread gender pay disparities. Women earn 19.8% less than men in raw comparisons. Moreover, women earn 0.8% less when comparing employees within the same local office, occupation, rank, and tenure, which represents a wealth loss of $250,000 by retirement for a representative female employee. This gap arises from women: sorting into lower-paying offices, having lower promotion rates, and having lower pay within-rank. We examine three economic mechanisms. First, the gap is concentrated among higher ranks and more educated employees, consistent with gender gaps in negotiation and subjective evaluation. Second, female leadership mitigates pay gaps for lower-ranked females. Third, labor mobility plays a negligible role.
Political Alignment and Startup Financing (with Swarnodeep Homroy and Anahit Mkrtchyan)
We examine how political partisanship influences capital allocation within the startup sector. First, when the VC and startup CEO belong to the same political party, a match is more likely. Second, political alignment predicts better performance: firms with VC-CEO alignment have higher odds of successful exits and lower likelihoods of bankruptcies and lawsuits. Lower CEO turnover, higher breakthrough innovation and government contracts represent channels underlying the better performance. Overall, findings are consistent with political alignment engendering trust that encourages risk taking. However, effects are mitigated at extreme levels of alignment, consistent with the costs of losing diversity of opinion.
What are we paid for? The determinants of business faculty pay (with Daniel Bradley, April Knill, and Jared Williams)
We examine the determinants of business school faculty pay, using detailed data on compensation, research, teaching, and administrative service. We estimate that a top-tier journal publication is worth $116,000, with significant variation across disciplines. Second-tier publications are worth one-third as much, and other publications have no impact. Further analysis of salaries and cross-discipline publication records suggests that researchers are compensated based on the journals they publish in rather than the departments they belong to. Conference presentations and teaching evaluations have significant but smaller effects than top-tier publications. Faculty administrators earn a premium, with department chairs receiving 11–35% and deans 58-94%. Post-Covid-19, real faculty pay has fallen more than in comparable fields and the sensitivity of pay to research performance has weakened.
The Changing Landscape of Corporate Governance Disclosure: Impact on Shareholder Voting (with David Becher and Jared Wilson)
We find that firms increasingly voluntarily adopt director skills matrices. Consistent with these image-based disclosures decreasing investors’ costs of evaluating director expertise, matrices lead to higher director vote support, particularly among cases where directors’ contribution to the firm was less clear. However, following poor performance, firms are more likely to utilize matrices to window dress director skills, and non-attentive investors are less likely to see through such behavior. Benefits of matrices are greatest among firms with less window dressing and with more incremental information relative to the director bios, as measured in terms of director retention and new board seats.
Environmental Lobbying Innovation and the Green Transition (with Sungjoung Kwon and Michela Verardo)
The competitive challenges and regulatory uncertainty associated with the green transition incentivize firms to both innovate and influence environmental policy. While much attention has focused on green innovation, we examine firms’ lobbying choices. We develop a method to identify “green” and “brown” environmental lobbying. We find that firms’ lobbying is often not aligned with their innovation efforts: many[ML1] [MV2] [ML3] green innovators engage in significant brown lobbying. These findings suggest that innovation and lobbying are complements under uncertainty, with innovation preserving long-run real options and lobbying influencing policy to reduce regulatory risk to near-term cash-flows. The direction of environmental lobbying is an informative signal, as it predicts real actions, such as emissions. However, neither environmental ratings nor UNPRI signatories’ investments incorporate this information.
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