Uncovering the Hidden Effort Problem

Azi Ben-Rephael, Bruce I. Carlin, Zhi Da and Ryan Israelsen

No 28441, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use machine learning to analyze minute-by-minute Bloomberg online status data and study how the effort provision of top executives in public corporations affects firm value. While executives likely spend most of their time doing other activities, Bloomberg usage data allows us to characterize their work habits. We document a positive effect of effort on unexpected earnings, cumulative abnormal returns following firm earnings announcements, and credit default swap spreads. We form long-short, calendar-time, effort portfolios and show that they earn significant average daily returns. Finally, we revisit several agency issues that have received attention in the prior academic literature on executive compensation.

JEL-codes: D22 D82 G32 M52 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-big and nep-cmp
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