Eitan Goldman

An Equilibrium Model of Incentive Contracts in the Presence of Information Manipulation

A heat-assisted ammonium thioglycolate permanent waving system is provided in which heat-containing clamps applied to the hair to assist the action of the ammonium thioglycolate bring the hair up to hair waving temperature and maintain it at such temperature for no more than 6 minutes and in which the ammonium thioglycolate solution is weaker than is used in non-heat-assisted permanent waving for the same type of hair and stronger than has been used in prior heat-assisted permanent waving for the same type of hair.

The Corporate Value of (Corrupt) Lobbying

We examine whether the stock market considers corporate lobbying to be value enhancing, using an event that potentially limited the ability of firms to lobby but was exogenous to their characteristics and prior lobbying decisions. The results show that this exogenous shock negatively affects the value of firms that lobby. In particular, we estimate that a firm that spends

Delegated Portfolio Management and Rational Prolonged Mispricing

100,000 more on lobbying in the 3 years before the shock (where sample average lobbying expenses are about

The Value of (Corrupt) Lobbying

4 million), experiences a loss of about

Organizational Form, Information Collection, and the Value of the Firm

1.2 million in shareholder value on average. We also examine the channels through which lobbying may create value for firms. Received September 27, 2012; accepted June 23, 2015 by Editor Laura Starks.

The impact of stock market information production on internal resource allocation

This paper examines how information becomes reflected in prices when investment decisions are delegated to fund managers whose tenure may be shorter than the time it takes for their private information to become public. We consider a sequence of managers, where each subsequent manager inherits the portfolio of their predecessor. We show that the inherited portfolio distorts the subsequent managers incentive to trade on long-term information. This allows erroneous past information to persist, causing mispricing similar to a bubble. We investigate the magnitude of the mispricing. In addition, we examine endogenous information quality. In some cases, information quality increases when the managers expected tenure decreases.

Contractual vs. Actual Separation Pay Following CEO Turnover

Does corporate lobbying simply add value by allowing firms to communicate expert information to policy makers, or does it also add value by facilitating potentially illegal quid pro quo arrangements, where lawmakers receive private benefits in exchange for favorable policy decisions? Using the corruption scandal involving the top Washington D.C. lobbyist Jack Abramoff as an exogenous negative shock to the ability of firms to lobby, we examine whether lobbying and illegal lobbying practices in particular, affect the market value of firms. The results suggest that firms that lobby more experience a significant decrease in market value following the guilty plea by Mr. Abramoff to bribery and corruption. A firm that spent

The Design of Debt Contracts

100,000 more on lobbying prior to the event year experiences an average decrease of

The Effect of Management Design on the Portfolio Concentration and Performance of Mutual Funds

1.4 million in value in a 3-day event window around the guilty plea. To examine whether lobbying adds value by corrupting policy makers, we use corporate social responsibility reputation rankings to capture a firm’s propensity to engage in corrupt practices, and find that lobbying related losses are larger for firms with a poor reputation for social responsibility. We also find that follow-up legislation aimed at curbing corrupt lobbying practices significantly reduces the value of firms that lobby. For example, a firm that spent

Weak Governance by Informed Large Shareholders

100,000 more on lobbying prior to the event year, experiences an average decrease of