https://sites.temple.edu/lnaveen/files/2014/05/JFE_risktaking_2006.pdf

Managerial incentives and risk-taking ☆

Many theories have been proposed to explain how corporate boards are structured. This paper groups these theories into three hypotheses and tests them empirically. We utilize a unique panel dataset that tracks corporate board development from the time of a firm's IPO through 10 years later. The data indicate that: (i) board size and independence increase as firms grow in size and diversify over time; (ii) board size - but not board independence - reflects a trade-off between the firm-specific benefits of monitoring and the costs of such monitoring; and (iii) board independence is negatively related to the manager's influence and positively related to constraints on such influence. These results are consistent with the view that economic considerations - in particular, the specific nature of the firm's competitive environment and managerial team - help explain cross-sectional variation in corporate board size and composition. Nonetheless, much of the variation in board structures remains unexplained even when all three hypotheses are combined, suggesting that idiosyncratic factors affect many individual boards' characteristics.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2989960_code17129.pdf?abstractid=605762&mirid=1

The Determinants of Corporate Board Size and Composition: An Empirical Analysis

The Effect of Board Characteristics on Firm Environmental Performance

When local media report news about local companies, they use fewer negative words compared to the same media reporting about non-local companies. We document that one reason for this positive slant is due to the firms’ local media advertising expenditures. Abnormal positive local media slant strongly relates to firm equity values. The effect is stronger for small firms, firms held predominantly by individual investors, and firms with illiquid or highly volatile stock, low analyst following, or high dispersion of analyst forecasts. These findings show that news content varies systematically with the characteristics and conflicts of interest of the source.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1861145_code336165.pdf?abstractid=1333765&mirid=1

Don't Believe the Hype: Local Media Slant, Local Advertising, and Firm Value

This paper provides evidence of risk-shifting behavior in the investment decisions of financially distressed firms. Using a real options framework, I show that shareholders' risk-shifting incentives can reverse the expected negative relation between volatility and investment. I test two hypotheses that are consistent with risk-shifting behavior: (i) volatility has a positive effect on distressed firms' investment; (ii) investments of distressed firms generate less value during times of high uncertainty. Empirical evidence using 40 years of data supports both hypotheses. I further evaluate the effect of various firm characteristics on risk shifting, and estimate the costs of the investment distortion.

/pdf/empirical-evidence-of-risk-shifting-in-financially-22p7p4314c.pdf

Empirical Evidence of Risk Shifting in Financially Distressed Firms

The Investment Opportunity Set and Corporate Financing, Dividend, and Compensation Policies: Empirical Evidence for Large Electric Holding Companies

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The Investment Opportunity Set and Corporate Financing, Dividend, and Compensation Policies: Empirical Evidence for Large Electric Holding Companies