NBER Publications by David Yermack

We study financial reporting and corporate governance in 216 U.S. companies accused of price fixing by antitrust authorities. We document a range of strategies used by these firms when reporting financial results, including frequent earnings smoothing, segment reclassification, and restatements. In corporate governance, cartel firms favor outside directors who are likely to be inattentive monitors due to their status as foreign or “busy.” When directors resign, they are often not replaced, and new auditors are rarely engaged. Cartel managers exercise their stock options faster than managers of other firms. While our results are based only upon firms engaged in price fixing, we expect that they should apply generally to all companies in which managers seek to conceal poor performance or per...

This paper shows close connections between CEOs’ vacation schedules and corporate news disclosures. I identify vacations by merging corporate jet flight histories with records of CEOs’ property ownership near leisure destinations. Companies disclose favorable news just before CEOs leave for vacation and delay subsequent announcements until CEOs return, releasing news at an unusually high rate on the CEO’s first day back. When CEOs are away, companies announce less news than usual, mandatory disclosures of material news are more likely to be filed late, and stock prices exhibit sharply lower volatility. Volatility increases when CEOs return to work. CEOs spend fewer days out of the office when their ownership is high and when the weather is bad at their vacation homes.