Showing papers by "David Yermack published in 2013"
TL;DR: A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but Bitcoin largely fails to satisfy these criteria as discussed by the authors, and has achieved only scant consumer transaction volume, with an average well below one daily transaction for the few merchants who accept it.
Abstract: A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but bitcoin largely fails to satisfy these criteria. Bitcoin has achieved only scant consumer transaction volume, with an average well below one daily transaction for the few merchants who accept it. Its volatility is greatly higher than the volatilities of widely used currencies, imposing large short-term risk upon users. Bitcoin’s daily exchange rates exhibit virtually zero correlation with widely used currencies and with gold, making bitcoin useless for risk management and exceedingly difficult for its owners to hedge. Bitcoin prices of consumer goods require many decimal places with leading zeros, which is disconcerting to retail market participants. Bitcoin faces daily hacking and theft risks, lacks access to a banking system with deposit insurance, and is not used to denominate consumer credit or loan contracts. Bitcoin appears to behave more like a speculative investment than a currency.
266 citations
Posted Content•
TL;DR: A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but Bitcoin largely fails to satisfy these criteria as discussed by the authors, and Bitcoin's daily exchange rates exhibit virtually zero correlation with widely used currencies and with gold, making bitcoin useless for risk management and exceedingly difficult for its owners to hedge.
Abstract: A bona fide currency functions as a medium of exchange, a store of value, and a unit of account, but bitcoin largely fails to satisfy these criteria. Bitcoin has achieved only scant consumer transaction volume, with an average well below one daily transaction for the few merchants who accept it. Its volatility is greatly higher than the volatilities of widely used currencies, imposing large short-term risk upon users. Bitcoin's daily exchange rates exhibit virtually zero correlation with widely used currencies and with gold, making bitcoin useless for risk management and exceedingly difficult for its owners to hedge. Bitcoin prices of consumer goods require many decimal places with leading zeros, which is disconcerting to retail market participants. Bitcoin faces daily hacking and theft risks, lacks access to a banking system with deposit insurance, and it is not used to denominate consumer credit or loan contracts. Bitcoin appears to behave more like a speculative investment than a currency.
120 citations
TL;DR: The authors found that CEOs go to their vacation homes just after companies report favorable news, and return to headquarters right before subsequent news is released, and stock prices exhibit sharply lower volatility when CEOs return to work.
Abstract: This paper shows close connections between CEOs’ absences from headquarters and corporate news disclosures. I identify CEO absences by merging corporate jet flight histories with records of CEOs’ property ownership near leisure destinations. I find that CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. When CEOs are away, companies announce less news than usual, mandatory disclosures are more likely to occur 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.
39 citations
Posted Content•
TL;DR: Although a strong public interest exists in regulating price fixing, it is found that there is little evidence that either corporate governance or the legal system holds managers of cartel firms accountable.
Abstract: We study the effects of cartel participation on top corporate managers. Although a strong public interest exists in regulating price fixing, we find little evidence that either corporate governance or the legal system holds managers of cartel firms accountable. Instead, managers of cartel firms enjoy greater job security, receive higher cash bonuses, and extract more ex post compensation through timely exercise of stock options. Legal sanctions against individual managers are infrequent, with enforcement actions focused on corporations rather than their officers. Managers appear to use concealment strategies actively to limit detection of cartel membership by their boards and auditors.
14 citations
TL;DR: In this paper, the authors study financial reporting and corporate governance in 218 companies accused of price fixing and find that these firms engage in evasive financial reporting strategies, including earnings smoothing, segment reclassification, and restatements.
Abstract: We study financial reporting and corporate governance in 218 companies
accused of price fixing. These firms engage in evasive financial reporting strategies, including earnings smoothing, segment reclassification, and restatements. In corporate governance, cartel firms favor outside directors likely to monitor inattentively due to low attendance, other board seats, and overseas residence. When directors resign, they are often not replaced, and auditors are rarely switched. Cartel firms have unusually low CEO turnover and rely on internal management promotions. Their managers exercise stock options faster than managers of other firms. Cartel firms are large donors to political candidates. 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 wrongdoing.
6 citations