Gaizka Ormazabal

Universidad de Navarra | UNAV · Department of Accounting and Control

Interest in sustainability information, from investors, managers, researchers, and others, has been expanding rapidly. We discuss recent advances and open questions related to sustainability reporting and disclosure through the lens of a supply and demand framework. Our discussion builds on prior research on financial reporting and highlights uniqu...

Using a wide sample of international publicly traded firms, this paper studies the rapidly increasing practice of incorporating Environmental, Social, and Governance (ESG) metrics in executive compensation contracts. Our evidence suggests that this compensation practice varies at the country, industry, and firm levels in ways that are consistent wi...

This paper studies the economic consequences of certification of corporate governance practices. For identification, we exploit a recent cross‐country initiative by a coalition of key institutions in Southeast Asia; the periodic publication of a “Top List” of companies in the region selected based on an independent assessment of corporate governanc...

We examine the effect of individual wealth taxes on dividend policy. Using a comprehensive sample of European public firms from 26 countries, we document that wealth taxes paired with substantial increases in stock prices are associated with significantly larger dividend payouts. This pattern is stronger among closely held firms, family firms, and...

To advance the world’s progress toward a net zero carbon economy, Patrick Bolton, Stefan Reichelstein, Marcin Kacperczyk, Christian Leuz, Gaizka Ormazabal, and Dirk Schoenmaker recommend that governments impose a mandate on corporations requiring them to report their annual direct carbon emissions.

This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms, we find evidence that the Big Three focus their engagement effort on large firms with high CO2 emission...

This paper provides early evidence on the effect of global regulation mandating a switch from loan loss provisioning (LLP) based on incurred credit losses (ICL) to LLP based on expected credit losses (ECL). Using a sample of systemically important banks from 74 countries, we find that ECL provisions are more predictive of future bank risk than ICL...

We study the effects of mandatory disclosure on competitive interactions in the setting of oil & gas (O&G) reserve disclosures by North American public firms. We document that reserve disclosures inform competitors: when one firm announces larger increases in O&G reserves, competitors experience lower announcement returns and higher real investment...

We show corporate-level real, financial, and (bank) risk-taking effects associated with calculating loan provisions based on expected-rather than incurred-credit losses. For identification, we exploit unique features of a Colombian reform and supervisory, matched loan-level data. The regulatory change induces a dramatic increase in provisions. Bank...

We analyze the trading of corporate insiders at leading financial institutions during the 2007 to 2009 financial crisis. We find strong evidence of a relation between political connections and informed trading during the period in which TARP funds were disbursed, and that the relation is most pronounced among corporate insiders with recent direct c...

We analyze the financial leverage of firms that collude to soften product market competition by forming a cartel. We find that cartel firms have lower leverage during collusion periods. This is consistent with the idea that cartel firms strategically reduce leverage to make their cartels more stable, because high leverage makes deviations from a ca...

This paper examines the effect of disclosure regulation on the takeover market. We study the implementation of a recent European regulation that imposes tighter disclosure requirements regarding the financial and ownership information on public firms. We find a substantial drop in the number of control acquisitions after the implementation of the r...

We show corporate-level real, financial, and (bank) risk-taking effects associated with calculating loan provisions based on expected-rather than incurred-credit losses. For identification, we exploit unique features of a Colombian reform and supervisory, matched loan-level data. The regulatory change induces a dramatic increase in provisions. Bank...

We exploit two regulatory shocks to examine the informational effects of tightening pre‐existing mandatory disclosure rules. Canadian National Instrument 51‐101 in 2003 and the United States rule “Modernization of Oil and Gas Reporting” in 2009 introduced quasi‐identical amendments which effectively tightened the rules governing oil and gas reserve...

This paper studies the effect of the public disclosure of the Securities and Exchange Commission (SEC) comment-letter reviews (CLs) on firms’ financial reporting. We exploit a major change in the SEC’s disclosure policy: in 2004, the SEC decided to make its CLs publicly available. Using a novel dataset of CLs, we analyze the capital-market response...

The question we address is whether mandated disclosure about dispersion of nonfinancial asset values can provide information relevant to assessing firm risk. Using a sample of Canadian oil and gas (O&G) firms between 2004 and 2011, we find that the difference between the disclosed 10th and 50th percentiles from the O&G reserves distribution, which...

This paper documents that directors exhibit a strong tendency to resign from their riskiest directorships in the period subsequent to the financial crisis of 2007–2008. I also find that, in the post-crisis period, riskier directorships become more costly for directors and that the post-crisis director turnover alters board characteristics at riskie...

The financial crisis of 2007–2008 fueled the idea that corporate governance in the financial sector urgently needed reform. The perception that poor corporate governance was a primary cause of the breakdown of the financial markets prompted extensive regulatory actions around the world. However, whether and how regulating banks’ corporate governanc...

I review the empirical research on the role of stakeholders in corporate governance with an emphasis in contributions from the accounting literature. In particular, I focus on the following stakeholders: employees, the general public, the media, related firms, the government, private regulators, gatekeepers, and foreigners. This list does not inclu...

Market reactions to news of cartel prosecutions are muted when indicted firms have a high proportion of independent directors on their boards. Independent directors serving on cartel-indicted firms are penalized by losing board seats and vote support at other firms where they serve. Notably, firms with more independent directors are more likely to...

This Closer Look illustrates the relation between executive compensation and organizational risk through the context of the financial crisis of 2008. We demonstrate that the incentives that bankers had to increase firm risk not only increased but increased substantially in the years preceding the financial crisis. We ask: • How well do boards under...

This paper examines the economic consequences associated with the board of director’s choice of whether to adhere to proxy advisory firm policies in the design of stock option repricing programs. Proxy advisors provide research and voting recommendations to institutional investors on issues subject to a shareholder vote. Since many institutional in...

This paper examines the economic consequences of institutional investors outsourcing research and voting decisions on matters submitted to a vote of public company shareholders to proxy advisory firms. These outsourcing decisions appear to be the result of the regulatory requirement that institutional investors vote their shares combined with incen...

Prior research argues that a manager whose wealth is more sensitive to changes in the firm’s stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk, the sensitivity of the manager’s wealth to changes in stock price (portfolio delta) will have two counter...

El presente artículo hace una breve reflexión sobre las alternativas in situ y prefabricadas para estructuras de hormigón, justificando la necesidad de profundizar en métodos multicriterio como ayuda a la toma de decisiones. Manifiesta la trascendencia de la calidad en las decisiones más allá de este ámbito concreto, así como su influencia en la ma...

Say on pay is the practice of granting shareholders the right to vote on a company’s executive compensation program at the annual shareholder meeting. Under the Dodd-Frank Act of 2010, publicly traded companies in the U.S. are required to adopt say on pay. Advocates of this approach believe that say on pay will increase the accountability of corpor...

This paper examines the relationship between firm performance and the recommendations provided by proxy advisory firms in the United States, regarding shareholder votes in stock option exchange programs. Using a comprehensive sample of stock option exchanges announced between 2004 and 2009, we find that exchange firms following the restrictive poli...

This paper examines changes in executive compensation programs made by firms in response to proxy advisory firm say-on-pay voting policies. Using proprietary models, proxy advisory firms, primarily Institutional Shareholder Services and Glass, Lewis & Co., provide institutional shareholders with a "for" (positive) or "against" (negative) recommenda...

This study examines the sources of credit risk associated with asset securitizations and whether credit rating agencies and the bond market differ in their assessment of this risk. Measuring credit risk using credit ratings, we find the securitizing firm’s credit risk is positively related to the firm’s retained interest in the securitized assets a...

This paper investigates the market reaction to recent legislative and regulatory actions pertaining to corporate governance. The managerial power view of governance suggests that executive pay, the existing process of proxy access, and various governance provisions [e.g., staggered boards and Chief Executive Officer (CEO)-chairman duality] are asso...

We review and evaluate the methods commonly used in the accounting literature to correct for cross-sectional and time-series dependence. While much of the accounting literature studies settings where variables are cross-sectionally and serially correlated, we find that the extant methods are not robust to both forms of dependence. Contrary to claim...

In 2002 the construction of a new line of the Barcelona Subway System was approved. In contrast with the one-level traditional solution adopted in the recently constructed extension of the Madrid Subway System, an innovative two-level cross-section design was adopted in Barcelona, Spain. Obviously, such a decision has paramount importance in both t...

This paper presents a method using intervals for representing and synthesizing imprecise information for multi-attribute evaluation and decision-making support. An implementation is given for selecting an alternative for a project in a real case in the context of construction in civil engineering. As a previous step to aggregate the available infor...

This paper presents a fuzzy set-based approach for representing and synthesizing information about the different kinds of variables involved in the evaluation of a project's value. The variables considered can be quantitative crisp or fuzzy as well as qualitative ordinal. The information is given either by a single expert or by a team of experts. T...

This paper investigates the role of the board in monitoring corporate risk. Proponents of risk-related governance structures such risk committees or Enterprise Risk Management (ERM) programs contend that risk monitoring adds value by ensuring that corporate risks are managed. An alternative view is that such governance structures are nothing more t...