Working Papers

  • Who is Keeping an Eye on Real Earnings Management? Focused vs. Distracted Directors (link here)

Job Market Paper with Beatriz García Osma and Cristina Grande-Herrera

We predict that independent directors' behavior hinges critically on their individual incentives. Using a large US sample for the period 1987 to 2016, we use a firm-level measure of within-board heterogeneity among independent directors' incentives to gauge their impact on real earnings management. This measure allows us to discern between focused and dispersed directors and it is plausibly exogenous to a single firm's choices. We find evidence that individual incentives influence boards' ability to constrain real earnings management. In particular, we show that boards composed of focused directors lower real earnings management. Moreover, we provide evidence of a more transparent information environment and a reduction in earnings restatements. Our evidence highlights the importance of independent directors' individual incentives to carry out their fiduciary duty to monitor the financial reporting process.

  • Boards of Directors' Legal Incentives and Corporate Outcomes (link here)

This paper evaluates the impact of a change in boards of directors’ legal incentives on firms payout and investment policies. This change is produced by the adoption of Non-Shareholder Constituencies Acts (NSHCAs), which are a set of staggered, state-level US laws that allow boards of directors to deviate from shareholder value maximization to the benefit of other stakeholders such as employees or creditors. Results indicate that firms subject to the NSHCAs show lower levels of payout, even net of capital issues. Alternatively, the adoption of these laws are associated with an increase in investment.

  • The Unanticipated Consequences of Labor Regulation: Evidence from Earnings Management (link here)

with Beatriz García Osma and Cristina Grande-Herrera

We study the impact of changes in labor protection on the accrual choices made by managers. We use two contrasting legal shocks that either increased labor protection (the Good Faith Exception) or decreased it (Right-to-Work laws). Using a sample that ranges from 1974 until 2016, we provide evidence of a positive impact of increased labor protection on income decreasing earnings management. Meanwhile, a decrease in labor protection seems to lead to a short-lived burst in positive abnormal accruals. Finally, we document a further impact on firms’ conditional conservative behavior and on employees’ payroll and wellbeing.


  • Who Loses when CEOs Sit on Multiple Boards?

Other Working Papers

  • Managerial Incentives for Attracting Attention (second round at European Financial Management)

with Nino Papiashvilli, María Gutiérrez Urtiaga and Josep A. Tribó

  • Do Institutional Investors Care about Corporate Social Responsibility and Irresponsibility?

with Silvina Rubio