Abstract: This paper examines whether shareholder pressure leads firms to reduce executive compensation or instead alter how compensation is reported. I exploit the discrete increase in shareholder engagement and pressure for board responsiveness created by Institutional Shareholder Services’ 70% Say-on-Pay support threshold. Using a stacked difference-in-differences design, I find that total reported executive compensation declines by approximately 4% following a below-threshold vote, while compensation excluding options remains unchanged. Independently valuing executive option grants using standardized Black-Scholes-Merton assumptions, I find that reported values decline by 7% to 9% relative to benchmark values. The resulting reporting gap is primarily associated with firms’ assumptions about expected option life, volatility, and dividend yield, and is smaller when external monitoring is stronger. I further find that firms shift toward relative-performance conditions in equity awards. Overall, the results suggest that firms exploit discretion in option valuation to understate the reported value of executive options in response to shareholder pressure. 

Abstract: Data center expansion is one of the largest new sources of electricity demand in the United States, raising concerns that the infrastructure supporting artificial intelligence may impose grid-mediated input-cost spillovers on incumbent firms and households. We exploit balancing-authority borders to compare nearby counties and plants that are similarly close to new data centers but differ in exposure to the associated demand shock. After data center operations begin, electricity prices rise in nearby counties served by the same balancing authority, for both residential and industrial/commercial customers. Nearby incumbent plants reduce employment, particularly where prices rise more and in economically active, densely populated areas. Multi-plant firms partly offset these losses by shifting employment toward unexposed sibling plants. Instrumental-variable estimates show that higher electricity prices reduce sales and employment, leave profitability and capital expenditures largely unchanged, and increase R&D investment. Overall, the evidence shows that data centers can reshape local economic activity by raising electricity costs within exposed grids and shifting employment away from affected plants. 

Abstract: This paper studies lobbying firms as intermediaries and examines whether sharing a lobbying firm impacts mutual funds’ voting and investment behavior toward their portfolio firms. We find that mutual funds are more likely to follow management recommendations when their fund family and a portfolio firm retain the same lobbying firm. The association is stronger when firms are harder to evaluate, management is less entrenched, or management faces greater opposition. To address endogeneity concerns, we exploit changes in lobbying connections induced by mergers involving mutual funds and mergers between lobbying firms. Common lobbying relationships extend beyond voting, as connected funds allocate more capital to connected firms and exhibit more profitable trading. While greater connected-fund support is associated with a higher likelihood that management obtains its preferred outcome, the market reaction becomes less favorable as such support increases. Overall, our findings suggest that shared professional intermediaries are relevant to the relationships between institutional investors and portfolio firms. 

Abstract: This study investigates how U.S. power sector firms respond to environmental violations identified by the EPA. Following a violation, affected plants adopt mitigation strategies such as reducing electricity generation, improving fuel quality, lowering coal use, installing scrubbers, upgrading pollution controls, and investing in energy-efficient generators. These actions are supported by economies of scale and public subsidies. At the firm level, violations are associated with increases in assets, capital expenditures, long-term debt, operating revenue, and electricity prices. However, operating and net income remain stable, suggesting that firms pass much of the compliance cost to consumers. While these responses contribute to environmental improvement, the accompanying rise in electricity prices raises concerns about social equity, particularly for households least able to absorb higher energy costs. Overall, the findings highlight a broader ethical and policy dilemma: efforts to enforce environmental accountability may disproportionately burden vulnerable populations.

Abstract: Analyzing the complex financial landscape of multi-segment conglomerates requires a more nuanced approach than that required for single-segment firms. This paper reveals that conglomerates strategically enhance their transparency by voluntarily disclosing more information to compensate for their business complexity. This finding is particularly pronounced when there is an increased demand for information from stakeholders and analysts or when the executive pay-performance sensitivity is higher. By strategically embracing transparency, conglomerates transform the complexities inherent in their financial reporting into a catalyst for higher valuation and lower capital costs. Overall, our study demonstrates that multi-segment firms tactically deploy voluntary disclosure to navigate their intricate business environment effectively.