Executive Function
Aging at the Very Top
Valentin Kecht, Alessandro Lizzeri & Farzad Saidi
NBER Working Paper, April 2026
Abstract:
This paper documents that the age at which CEOs are appointed has risen sharply over the past several decades. Using newly assembled data covering a wide set of firms, we show that this increase is concentrated outside the largest listed firms and driven primarily by longer and more diverse external career paths prior to CEO appointment. These patterns are difficult to reconcile with explanations based on demographics, schooling, or tenure, and are instead consistent with a matching framework in which rising demand for generalist human capital leads firms to trade off peak ability for accumulated experience. We investigate the forces behind this shift. Using variation in consulting networks, we establish that firms place greater weight on diversified managerial experience as operating environments have become increasingly uncertain and complex. We also provide evidence for a supply-side response in which prospective CEOs broaden their skill portfolio as demand for generalist skills rises.
Does the Financial Experience of SEC Regional Directors Impact SEC Investigations?
James Justin Blann
Management Science, forthcoming
Abstract:
The U.S. Security and Exchange Commission's (SEC's) Division of Enforcement is frequently criticized for its ineffective oversight, and certain vocal critics attribute this to a lack of financial experience within the SEC. Using novel hand-collected data on SEC regional directors, I find that most of these senior SEC officials lack practical financial experience. I then use a staggered difference-in-differences research design and find that directors with financial experience open 62% more investigations (i.e., four to five additional investigations per office-year). This result is consistent with their financial experience impacting investigations. Additional analyses reveal that this effect is stronger when financial acumen likely matters more and that financial directors conduct more efficient and consequential investigations. Importantly, these results do not appear to be explained by the experience of other directors or by financial regional directors handling more cases. This study answers recent calls for more research on individual regulators and presents timely evidence as the SEC seeks to improve its investigation process. More generally, these findings provide new insights into the SEC's oversight process and should be of interest to regulators and market participants concerned with the SEC's policing of financial misreporting.
Dual-Track Bias
Alexander Platt
Washington University Law Review, forthcoming
Abstract:
Since the JOBS Act of 2012 made it easier to start the IPO process, startups have increasingly pursued a 'dual-track' exit strategy, simultaneously preparing for both an IPO and an acquisition. But, contrary to the JOBS Act's goals, startups have been exploiting this new advantage predominantly to enhance acquisition exits rather than IPOs. This Article presents the first systematic legal and economic analysis of dual-tracking. I show how dual-tracking pushes firms from IPOs and towards acquisitions and identify the key institutional mechanisms driving this result. First, securities law and transactional practice create significant informational advantages for prospective acquirers over prospective IPO investors in a dual-track process. Auction theory predicts that these informational asymmetries would produce the imbalanced outcomes that have been observed. Second, investment banks who serve dual roles (as both underwriter and M&A advisor) for dual-tracking firms have private incentives to steer clients toward acquisitions. Policymakers who want to "make IPOs great again" will not succeed by making IPOs more attractive; they must make IPOs more attractive relative to acquisitions.
Forecasting Earnings from Home
Michael Durney et al.
Management Science, forthcoming
Abstract:
We examine the impact of working from home (WFH) practices on the financial services industry, focusing on sell-side equity analysts. We find that analysts who previously benefited from access to in-person interactions with other informed parties experience a greater decline in earnings forecast accuracy following the COVID lockdown and the shift to WFH. Notably, the informational advantage associated with the in-person access disappears during the lockdown and returns once restrictions are lifted. Our results are stronger for all-star analysts and analysts with shorter coverage periods, suggesting that all-star analysts rely relatively more on access to in-person interactions prelockdown and that accumulated firm-specific knowledge mitigates the loss of in-person interactions. Our results remain robust across alternative analyst performance measures. We conclude that, despite recent advances in communications technology, AI, and machine learning, in-person interactions remain a unique and difficult to substitute information channel for sell-side research providers and that WFH impedes information flows between market participants in capital markets.
Expectations Matter: When (Not) to Use Machine Learning Earnings Forecasts
John Campbell et al.
Management Science, forthcoming
Abstract:
We comprehensively examine the usefulness of machine learning technology to predict a firm's earnings and offer three main findings. First, although prior literature suggests machine learning can offer better earnings forecasts than analysts, we show that this result is highly sensitive to machine learning model specification choices (i.e., 80% of evaluated machine forecasts fail to beat analysts). Second, we examine why the most accurate machine learning forecast consistently beats analysts, finding that they correct for predictable analyst biases that are both linear and nonlinear and largely relate to analysts' prior forecast errors, forecasted earnings levels, and the firm's stock price. Finally, we find that investors' earnings expectations, as revealed through stock prices, largely -- but do not fully -- correct for these predictable analyst biases, with delayed price realization up to nine months. In additional analysis, we find that optimal machine learning specification choices remain stable over time and that, although the machine's outperformance narrows in recent periods, it remains substantial among small-cap stocks. Overall, our study moves beyond the question of whether machine forecasts are superior to human forecasts and instead focuses on which machine forecast specifications matter, as well as when and why machine forecasts are most superior. In so doing, we provide code and estimates for the most accurate machine forecast specification and demonstrate that investors' expectations appear to largely (but not fully) align with them.
Financial Reporting and Employees
Charles (Chad) Ham et al.
Indiana University Working Paper, March 2026
Abstract:
We survey nearly 6,000 employees of 1,265 publicly traded companies to understand whether and how public company employees use financial reporting information. Employees indicate that they: (1) are nearly universally aware of their firm's financial news, but primarily learn of such news through internal company communications rather than public news sources; (2) view their employer's financial condition as an important factor in employment decisions; (3) possess financial incentives to monitor reported results, with a majority reporting compensation linked to financial performance; (4) find operating metrics like earnings and sales more decision-relevant than stock returns; and (5) use public financial disclosures, such as earnings press releases and conference calls, to assess their employment prospects. We also provide novel evidence that firms operate an internal reporting regime that mirrors external reporting, disseminating financial information to employees predominantly on a quarterly basis, and that external disclosures may serve as verification for management's internal narrative. By measuring baseline rates of awareness, sources of information acquisition, preferred metrics, and perceived usefulness, we establish facts that can both support prior, and anchor future, research in the growing literature at the intersection of labor and accounting.
The Product Market Effects of Index Inclusion
Varun Sharma
Review of Financial Studies, forthcoming
Abstract:
I investigate how index membership affects firms' product-market strategy. After plausibly exogenous index inclusion, firms gain market share by reducing product prices, giving better trade credit, and increasing sales and marketing expenses. Firms reduce prices for products with low market share and higher switching costs and habits. This comes at the cost of lower profitability, which increases in subsequent periods. Further analysis suggests that managerial learning about an improved funding environment from the post-index inclusion stock price increase is the underlying channel that leads to the observed increase in investment to gain market share. A model further corroborates these findings.
Executive Cooperativeness: Evidence from Conference Calls
Wei Cai et al.
Management Science, forthcoming
Abstract:
Cooperativeness is essential to individual and organizational success. We exploit a unique feature of conference calls to study individual executives' cooperativeness, indicated by their directly inviting colleagues to respond to analysts' questions, and its relation with their career outcomes and firm performance. After validating our measure, we find that cooperativeness is associated with relevant executive characteristics. Older, more senior, and more experienced executives are more likely to display cooperativeness. We also find that cooperativeness persists but can be influenced by colleagues. Turning to the relation with career and firm outcomes, we find robust evidence of a positive association between cooperativeness and the likelihood of being promoted to chief executive officer (CEO). Appointing CEOs who are more cooperative than their predecessors is associated with an average three-day abnormal return of 0.6% around the announcement of the appointment.