Katharina Lewellen

Equity Vesting and Managerial Myopia

This paper links the CEO’s concerns for the current stock price to reductions in real investment. We identify short-term concerns using the amount of stock and options scheduled to vest in a given quarter. Vesting equity is associated with a decline in the growth of research and development and capital expenditure, positive analyst forecast revisions, and positive earnings guidance, within the same quarter. More broadly, by introducing a measure of incentives that is determined by equity grants made several years prior, and thus unlikely driven by current investment opportunities, we provide evidence that CEO contracts affect real decisions.Received May 12, 2015; editorial decision December 15, 2016 by Editor Andrew Karolyi.

Investment and Cash Flow: New Evidence

We provide new estimates of investment-cashflow sensitivities for a large cross section of U.S. firms from 1971–2006. Our tests extend the literature in several key ways and provide strong evidence that cashflow matters beyond its correlation with a firm’s investment opportunities. Controlling only for M/B, a dollar of currentand prior-year cashflow is associated with

Equity Vesting and Investment

0.59 of additional investment for firms that are the least likely to be constrained and

Financing Decisions When Managers Are Risk Averse

0.75 for firms that are the most likely to be constrained. Investment-cashflow sensitivities for the two groups drop to a conservatively estimated but still significant 0.32 and 0.67, respectively, after correcting for measurement error in M/B (our proxy for Q). The results suggest that financing constraints and, perhaps, free cashflow problems are important for investment decisions.

Performance-Induced CEO Turnover

Oxford University Press (OUP) https://academic.oup.com/rfs/article/doi/10.1093/r... This is a pre-copyedited, author-produced version of an article accepted for publication in Review of Financial Studies following peer review. The version of record: Alex Edmans, Vivian W. Fang, Katharina A. Lewellen; ’Equity vesting and investment’, Review of Financial Studies 2017; 30(7); pp.2229-2271 is available online at: https://academic.oup.com/rfs/article/doi/10.1093/rfs/hhx018/3058111/Equity-Vesting-andInvestment and at: https://doi.org/10.1093/rfs/hhx018