Research
Working Papers
Flows, Financing Decisions, and Institutional Ownership of the U.S. Equity Market
with Alon Brav and Dorothy Lund
Abstract This Article analyzes the relationship between flows to institutional investment managers, corporate financing decisions, and institutional ownership of U.S. public equity. In so doing, it provides new evidence about the drivers of institutional investor growth in equity ownership over the past two decades. Contrary to conventional narrative, we find that equity capital flows into the “Big Three” investment managers have slowed in recent years, with substantial differences between each institution. We also present a framework to understand how fund characteristics and corporate actions such as stock buybacks and equity issuances combine to shape the evolution of institutional ownership, including that of the Big Three. Our evidence reveals why certain institutions win and lose in the contest for flows and implicates important legal conversations including the impact of stock buybacks, mergers between investment managers, and the governance risks presented by the rise of index investing.
Human Capital, Competition and Mobility in the Managerial Labor Market
(Draft available upon request)
with John Barry and Noah Lyman
Abstract We estimate a search model of managerial careers to quantify the relative importance of human capital accumulation (both general and firm-specific), managerial bargaining power, and imperfect labor market competition in shaping compensation and mobility in the market for US corporate executives. The composition of human capital is career-dependent and varies widely across managers: over tenure, firm-specific capital is the greatest driver of wage growth, whereas over experience in the labor market, job search and competition dominate. Firm-specific capital can help explain the high rate of internal CEO hires and low observed cross-firm CEO mobility. We further show that labor market competition (relative to pure bargaining power) makes up the majority of realized CEO surplus capture, and that firm-specific human capital positively interacts with competition in determining CEOs’ shares of rents because it raises the match-specific quality between the firm and manager.