Dhananjay Nanda

• Professor (Full) at University of Miami

We examine how similarity in institutional, legal, and social characteristics between a firm's and its directors’ home countries, i.e., country-pair homophily, affects foreign director appointments. We estimate a gravity model that includes economic and geographic proximity and find that country-pair homophily is a significant determinant of foreig...

We provide new evidence on the codependence among the many country attributes previously linked to financial reporting quality. First, we show that the synchronicity of 21 changing country attributes spikes surrounding mandatory IFRS adoption. Thus, while IFRS adoption “explains” increased reporting quality, this finding disappears after including...

We examine changes in CEOs' disclosure styles in quarterly earnings conference calls over their tenure. Our longitudinal analysis of newly hired CEOs shows that CEOs' forward-looking disclosures and their disclosures' relative optimism decline in their tenure. Further, externally hired and inexperienced CEOs are more future-oriented, and younger CE...

In a broad cross-section of US firms, we document that the likelihood of a CEO’s performance-related dismissal declines in his tenure. This finding is consistent with both firm performance revealing information about a CEO’s uncertain executive ability and CEO tenure reflecting weak firm governance choices that reduce the likelihood of performance-...

We empirically examine two competing claims: first, if a firm’s Corporate Social Responsibility (CSR) activity is driven by its CEO’s private rent extraction (i.e. an agency problem), firms with higher CSR ratings are poorly governed and their managers are less likely to be dismissed for poor financial performance. In contrast, if CSR reflects owne...

In a broad cross-section of US firms, we document that the likelihood of a CEO's performance-related dismissal declines in his tenure. This finding is con-sistent with both firm performance revealing information about a CEO's uncertain executive ability and CEO tenure reflecting weak firm governance choices that reduce the likelihood of performance...

We document that credit spreads are positively related to a firm's balance sheet debt and two types of off-balance sheet contractual obligations: noncancellable operating leases and unconditional purchase obligations. However, while leases and purchase obligations receive the same treatment by the Bankruptcy Code and current financial reporting rul...

We examine relations between board size, managerial incentives and enterprise performance in nonprofit organizations. We posit that a nonprofit's demand for directors increases in the number of programs it pursues, resulting in a positive association between program diversity and board size. Consequently, we predict that board size is inversely rel...

We document that the number of past quarterly performance surprises: earnings decreases, negative analysts' forecast errors, and negative stock returns, are positively related to the likelihood of CEO dismissal. This relation declines over a CEO's tenure, consistent with performance surprises revealing information about uncertain managerial ability...

ABSTRACT We investigate the relations among voluntary disclosure, earnings quality, and cost of capital. We find that firms with good earnings quality have more expansive voluntary disclosures (as proxied by a self-constructed index of coded items found in 677 firms' annual reports and 10-K filings in fiscal 2001) than firms with poor earnings qual...

We study the disclosure strategy of a firm's manager who may privately observe two signals that are informative about the firm's prospects. The two signals correspond to the firm's two business segments and are observationally correlated, i.e. the observation of one affects the likelihood of observing the other. If the manager makes a separate disc...

Ongoing employment relationships often give rise to implicit, dynamic incentives. We describe the implications of implicit incentives when firms use information about both an employee's past performance and his future productivity in a two-period agency model. We show that when an accounting system serves these dual objectives, an employee's implic...

We study the relation between board size and managerial incentives in non-profit firms. We present a model where board membership is granted to parties that wish to direct the manager's actions in exchange for assets that they bring within the firm. These board members (directors) differ in the relative value they place on the nonprofit's activitie...

We study the impact of the size of a firm's board of directors on managerial incentives. We present a model where a risk-averse agent (the top management team) performs multiple tasks for a firm that is controlled by multiple principals (the board of directors) who differ in the relative value they place on each task. We show that the agent's incen...

We study the impact of the size of a firm's board of directors on managerial incentives. We present a model where a risk-averse agent (the top management team) performs multiple tasks for a firm that is controlled by multiple principals (the board of directors) who differ in the relative value they place on each task. We show that the agent's incen...

We re-examine the effects of regulation fair disclosure (Reg FD) using ADRs (who are exempt from Reg FD) to control for confounding events which affected all traded firms. Tests based on public information metrics (returns volatility, informational efficiency and trading volume) and on analyst information metrics (forecast dispersion and accuracy)...

Christensen et al. (Dynamic incentives and responsibility accounting: a comment, J. Account. Econ. 35 (2003) 423) examine Indjejikian and Nanda (J. Account. Econ. 27 (1999) 177) and suggest that our characterization of the inefficiency arising from limited commitment as a “ratchet effect” phenomenon is misplaced. In this reply, we describe the ratc...

We examine a firm's choice of a measurement system designed to serve two distinct objectives; provide forward-looking information about future firm productivity and ex post information about past managerial performance. A firm can have two separate measurements, one for each purpose, or a single measure that simultaneously serves both objectives. I...

We examine the relation between managers’ disclosure activities and their stock price-based incentives. Managers are privy to information that investors demand and are reluctant to publicly disseminate it unless provided appropriate incentives. We argue that stock price-based incentives in the form of stock-based compensation and share ownership mi...

This paper examines the relation between disclosure choice and the form of compensation paid to managers. Agency costs of disclosure can lead managers to disclose less information than desired by shareholders. We argue that shareholders use stock-based compensation contracts to mitigate the agency costs of disclosure. Consistent with our hypothesis...

This paper examines systematic differences in earnings management across 31 countries. We propose an explanation for these differences based on the notion that insiders, in an attempt to protect their private control benefits, use earnings management to conceal firm performance from outsiders. Thus, earnings management is expected to decrease in in...

This paper studies the role of performance standards in executive annual bonus plans. We find that earned bonuses exceed pre-determined target bonuses (on average), implying that standards do not reflect performance expectations in a statistical sense. We also find that target bonuses are adjusted upward (downward) in response to performance above...

In dynamic principal–agent relationships, unless a principal can commit to a multiperiod contract, incentives are affected by a problem known as the ratchet effect. We present a two-period agency model to show that the use of more aggregate performance measures and greater consolidation of responsibility helps mitigate the ratchet effect. For examp...

Over the last decade new manufacturing methods and techniques have focused on reducing waste in production tasks. Just-In-Time (JIT) manufacturing is one of the most popular new technologies adopted. This dissertation describes the impact of Just-In-Time manufacturing on firm value, product variety and supplier coordination. It consists of three es...

This paper describes the results of a recent field study of computer integrated manufacturing (CIM) adoption strategies in U.S. manufacturing firms. The purpose of the study was to identify the extent to which CIM technologies are in use in U.S. firms, the impact of a facility's process characteristics on the CI M development process, and the adopt...

This paper describes the results of a recent field study of CIM adootion strateeies in US manufacturing tkms. The purpose of the study Gas to identify the extent to which CIM technologies are in use in US firms, the impact of a facility's process characteristics on the CIM development process, and the adoption policy being followed implicitly or ex...

Just-In-Time manufacturing has been subjected to numerous studies both empirical and methodological. This work attempts to measure the impact of JIT on accounting measures of performance. Most technologies and investments are justified on the basis of their impact on financial and accounting measures which are not easily quantified. Our empirical m...

We study the effect of heterogeneity in a firm's board of directors on managerial incentives and firm performance. We present a model of common agency, where a risk-averse agent (the top management team) performs multiple tasks for a firm that is controlled by multiple principals (the board of directors) who differ in the relative value they place...

We study how asset price bubbles formed during the 2007 Chinese equity market, a time period in which the median Shanghai A-share returned 188% over six months and had a P/E ratio reaching 85. Our unique setting allows us to construct …ve di¤erent stock-speci…c measures of bubble intensity. For all …ve measures, we …nd signi…cantly smaller bubbles...

We examine the pricing of …rms'non-cancellable operating lease obligations, which are o¤- balance sheet obligations, by the Credit Default Swap (CDS) market. We …nd that the price impact of operating leases on credit spreads is larger than the price impact of on-balance sheet debt. This is consistent with structural models of debt pricing, since le...