Professor of Empirical Practice
Alma Cohen, Moshe Hazan, Roberto Tallarita & David Weiss, The Politics of CEOs (Mar. 19, 2019).
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CEOs of public companies have influence over the political spending of their firms, which has been attracting significant attention since the Supreme Court decision in Citizens United. Furthermore, the policy views expressed by CEOs receive substantial consideration from policymakers and the public. Therefore, we argue, the political preferences of CEOs are important for a full understanding of U.S. policy making and politics. To contribute to this understanding, we provide novel empirical evidence on the partisan leanings of public-company CEOs. We use Federal Election Commission (FEC) records to compile a comprehensive database of the political contributions made by more than 3,500 individuals who served as CEOs of S&P 1500 companies between 2000 and 2017. We find that these political contributions display substantial partisan preferences in support of Republican candidates. We identify how this pattern is related to the company’s industry, geographical region, and CEO gender. To highlight the significance of CEOs’ partisan preferences, we show that public companies led by Republican CEOs tend to be less transparent to investors with respect to their political spending. Finally, we conclude by discussing the important policy implications of our analysis.
Alma Cohen & Crystal S. Yang, Judicial Politics and Sentencing Decisions, 11 Am. Econ. J.: Econ. Pol’y 160 (2019).
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Racial and gender disparities are prevalent in the criminal justice system, but the sources of these disparities remain largely unknown. This paper investigates whether judge political affiliation contributes to these disparities using data on over 500,000 federal defendants linked to sentencing judge. Exploiting random case assignment, we find that Republican appointed judges sentence black defendants to 3.0 more months than similar non-blacks and female defendants to 2.1 fewer months than similar males, compared to Democratic appointed judges. Disparities by judge political affiliation cannot be explained by other judge characteristics and grow substantially larger when judges are granted more discretion.
Anat Bracha, Alma Cohen & Lynn Conell-Price, The Heterogeneous Effect of Affirmative Action on Performance, 158 J. Econ. Behavior & Org. 173 (2019).
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This paper experimentally investigates the effect of gender-based affirmative action (AA) on performance in the lab, focusing on a tournament environment. The tournament is based on GRE math questions commonly used in graduate school admission, and at which women are known to perform worse on average than men. We find heterogeneous effect of AA on female participants: AA lowers the performance of high-ability women and increases the performance of low-ability women. Our results are consistent with two possible mechanisms—one is that AA changes incentives differentially for low- and high-ability women, and the second is that AA triggers stereotype threat.Bracha
Alma Cohen & Charles C.Y. Wang, Reexamining Staggered Boards and Shareholder Value 125 J. Fin. Econ. 637 (2017).
Cohen and Wang (2013) (CW2013) provide evidence consistent with market participants perceiving staggered boards to be value reducing. Amihud and Stoyanov (2016) (AS2016) contests these findings, reporting some specifications under which the results are not statistically significant. We show that the results retain their significance under a wide array of robustness tests that address the concerns expressed by AS2016. Our empirical findings reinforce the conclusions of CW2013.
Lucian A. Bebchuk, Alma Cohen & Scott Hirst, The Agency Problems of Institutional Investors, 31 J. Econ. Persp. 89 (2017).
We analyze how the rise of institutional investors has transformed the governance landscape. While corporate ownership is now concentrated in the hands of institutional investors that can exercise stewardship of those corporations that would be impossible for dispersed shareholders, the investment managers of these institutional investors have agency problems vis-à-vis their own investors. We develop an analytical framework for examining these agency problems and apply it to study several key types of investment managers. We analyze how the investment managers of mutual funds - both index funds and actively managed funds - have incentives to under-spend on stewardship and to side excessively with managers of corporations. We show that these incentives are especially acute for managers of index funds, and that the rise of such funds has system-wide adverse consequences for corporate governance. Activist hedge funds have substantially better incentives than managers of index funds or active mutual funds, but their activities do not provide a complete solution for the agency problems of institutional investors. Our analysis provides a framework for future work on institutional investors and their agency problems, and generates insights on a wide range of policy questions. We discuss implications for disclosure by institutional investors; regulation of their fees; stewardship codes; the rise of index investing; proxy advisors; hedge funds; wolf pack activism; and the allocation of power between corporate managers and shareholders.