Josef Zechner, Vienna University of Economics and Business
Abstract: This paper develops a dynamic general equilibrium model with stochastic social preferences and endogenous corporate investment decisions. We find that firms’ investment decisions largely undo the effects of shifts in preferences on stock prices and risk premia. Only when most firms have already switched to a green technology do further preference changes have stronger effects on stock prices. Stochastic social preferences delay the move to a greener economy, especially when preference shocks correlate positively with aggregate cash flows. Risk aversion initially helps the transition, but later slows it down. Correlations between stock returns of firms in brown and green sectors increase (decrease) following an increase (decrease) in green investors’ social preferences. Small changes in social preferences can have large supply effects even when they only have negligible effects on the cost of capital wedge between green and brown firms.
Abstract: Using more than 4,900 assessments, we study changes in the characteristics and objectives of CEOs and top executives since 2001. The same four factors explain roughly half of the variation of assessed CEO characteristics in this larger sample of executive assessments as in Kaplan and Sorensen (2021). After the global financial crisis (GFC), the average interviewed CEO candidate has lower overall ability, is more execution oriented / less interpersonal, less charismatic and less creative / strategic than pre-GFC. Except for overall ability, these differences persist in hired CEOs. Interpersonal or “softer” skills, if anything, decline over time for both CEO candidates and hired CEOs. Pre- and post-GFC, we find a positive correlation between the ability of assessed CEOs and other C-level executives assessed at the same company, suggesting that higher ability executives complement each other. Finally, we look at the relation of the objectives for which the CEOs are interviewed to CEO characteristics.
Discussant: S. Abraham (Avri) Ravid, Yeshiva University
Timothy McQuade, University of California-Berkeley
Gabriel Ramos, Imperial College London
Thomas Rauter, University of Chicago
Olivia Xiong, University of Chicago
Abstract: We conduct a field experiment in partnership with the largest job platform in Brazil to study how environmental, social, and governance (ESG) practices of firms affect talent allocation. We find both an average job seeker's preference for ESG and a large degree of heterogeneity across socioeconomic groups, with the strongest preference displayed by highly educated, white, and politically liberal individuals. We combine our experimental estimates with administrative matched employer-employee microdata and estimate an equilibrium model of the labor market. Counterfactual analyses suggest ESG practices increase total economic output and worker welfare, while increasing the wage gap between skilled and unskilled workers.
