Léa H. Stern
Department of Finance and
Foster School of Business
University of Washington
Seattle, WA 98195
NBER Working Papers and Publications
|March 2018||Selecting Directors Using Machine Learning|
with Isil Erel, Chenhao Tan, Michael S. Weisbach: w24435
Can an algorithm assist firms in their hiring decisions of corporate directors? This paper proposes a method of selecting boards of directors that relies on machine learning. We develop algorithms with the goal of selecting directors that would be preferred by the shareholders of a particular firm. Using shareholder support for individual directors in subsequent elections and firm profitability as performance measures, we construct algorithms to make out-of-sample predictions of these measures of director performance. We then run tests of the quality of these predictions and show that, when compared with a realistic pool of potential candidates, directors predicted to do poorly by our algorithms indeed rank much lower in performance than directors who were predicted to do well. Deviations ...
|September 2010||Pay for Performance from Future Fund Flows: The Case of Private Equity|
with Ji-Woong Chung, Berk A. Sensoy, Michael S. Weisbach: w16369
Lifetime incomes of private equity general partners are affected by their current funds' performance through both carried interest profit sharing provisions, and also by the effect of the current fund's performance on general partners' abilities to raise capital for future funds. We present a learning-based framework for estimating the market-based pay for performance arising from future fundraising. For the typical first-time private equity fund, we estimate that implicit pay for performance from expected future fundraising is approximately the same order of magnitude as the explicit pay for performance general partners receive from carried interest in their current fund, implying that the performance-sensitive component of general partner revenue is about twice as large as commonly discu...
Published: Ji-Woong Chung & Berk A. Sensoy & LÃ©a Stern & Michael S. Weisbach, 2012. "Pay for Performance from Future Fund Flows: The Case of Private Equity," Review of Financial Studies, Society for Financial Studies, vol. 25(11), pages 3259-3304. citation courtesy of