Robert Davidson's recent Corporate Governance Publications
February 4, 2019
Over the past year, Dr. Robert Davidson's research has been published in three leading journals. In this article, he shares an overview of his research as well as details about each publication.
My research contributes broadly to the field of corporate governance and in particular to subfields related to accounting fraud and insider trading, and executive incentives, behavior, and compensation. My research examines how we can predict firm-level outcomes as a function of CEO or senior executive personal characteristics such as past criminal behavior and personal materialism. Broadly this area of research examines how observed differences in individual’s utility functions can lead to dramatic differences in firm outcomes. Though much of my research analyzes data from corporate settings, it is ultimately about people and trying to further understand their decisions.
Personal Determinants of External Finance (with Christo Pirinsky). Journal of Financial and Quantitative Analysis 2019.
This paper examines how trust and the willingness to break a contract influence the demand for finance. Prior studies going back decades analyze how these factors influence the supply of finance, but prior work had not considered the effect on demand. We find that individuals who suffer less dis-utility from breaking a social norm are more willing to borrow. We find these results when analyzing responses from over 100,000 participants from over 100 countries in the World Values Survey and when analyzing the personal mortgages of hundreds of CEOs of large US companies.
CEO Materialism and Corporate Social Responsibility (with Aiyesha Dey and Abbie Smith). The Accounting Review 2019.
This paper documents which types of CEOs invest more heavily in corporate social responsibility (CSR) and is the first to systematically document for a large sample which firms generate shareholder value from socially responsible behavior. We find that CSR is positively associated with firm value in firms with non-materialistic CEOs while firm value is unaffected by CSR in firms with materialistic CEOs (where materialism is measured using personal asset ownership). Given the rise of socially responsible investment funds and a growing public more willing to hold firms accountable to broader standards of conduct, this results should be of interest to a broad audience.
Bank CEO Materialism, Corporate Culture, and Risk (with Robert Bushman, Aiyesha Dey, and Abbie Smith). Journal of Accounting and Economics 2018.
The article was selected for presentation at a meeting at the Federal Reserve Bank of New York and was solicited for publication in the journal. This paper is the first to show a secular shift in the types of individuals who became bank CEOs after the repeal of Glass-Steagal in 1999. In the mid-1990s the banking industry had the lowest percentage of materialistic CEOs (around 45%). By the mid-2000s the banking industry had the highest percentage of materialistic CEOs (around 65%). Prior research has documented that the same people may behave differently under different regulatory environments. We show that the composition of the labor market for bank executives itself changed after deregulation.