This study examines why people engage in unethical pro-organizational behavior (UPB) by focusing on an overlooked mechanism: the mere fact of being a subordinate at the workplace. To establish a causal relationship, we conducted an online experiment with 615 full-time employees. We primed participants with private versus work-related contexts before instructing them to follow a rule that was beneficial for the organization but potentially unethical. We find that individuals high in power distance orientation engage to a greater extent in UPB after being primed on their work-related identity. Our results further emphasize that empowering leadership can mitigate this effect: For participants high in power distance, empowering messages eliminated the priming effect; their UPB levels matched those in the private control group. Thus, our study makes three key contributions: First, we add to the discussion of UPB antecedents. Second, we identify organizations that may be particularly vulnerable. Third, we point to strategies that could reduce UPB.

This article shows that when a compensation peer firm experiences a significant failure in its say-on-pay (SOP) voting, the focal firm’s stock price is adversely affected, resulting in reduced CEO pay in the subsequent period. This pay-reduction effect is amplified when the board is more powerful, when proxy advisors express concerns about CEO pay, and when the compensation consultant lacks quality. Directors who react to the price drop and cut the CEO’s pay receive higher votes in future director elections, implying a market feedback effect for directors of the focal firm triggered by their peers’ SOP voting failure.

Exploiting the executive compensation reform for state-owned enterprises (SOEs) in China that enforce strict pay restrictions, this study examines whether and how pay restrictions affect firms’ labor investment inefficiency. We find that SOEs experience a decrease in abnormal labor investment following the reform relative to non-SOEs, particularly in over-investment in labor. Our results show that the reform is associated with lower labor investment inefficiency through strengthened internal governance and mitigated internal social comparison. In addition, pay restrictions specifically curb firms’ tendency to over-hire. Further analysis reveals that imposing pay restrictions on executives enhances labor quality and also promotes employee well-being. This study offers novel policy insights by showing how pay restrictions to SOE executives can reduce vertical agency costs and investment inefficiency and enhance workforce quality and well-being in weak institutional environments.

Using lenders who become members of the Task Force on Climate-Related Financial Disclosures (TCFD) as an exogenous shock, we examine whether and how lenders’ commitment to transparent climate-related disclosures affects borrowers’ environmental performance. We find that borrowers of TCFD-member lenders, relative to control firms, significantly improve their environmental performance after the TCFD launch. Lenders’ disclosure commitments influence borrowers through credit rationing and monitoring. Specifically, polluting borrowers face higher borrowing costs, reduced access to credit, and greater incorporation of environmental action covenants in loan agreements. Additionally, polluting borrowers of TCFD-member lenders experience heightened financial constraints. Finally, borrowers of TCFD-member lenders are more likely to adopt the TCFD framework for climate-related disclosure after the TCFD establishment. Together, these findings illuminate the role of lenders in driving corporate environmental performance improvement through their commitment to transparent climate-related disclosures.

This paper examines how initial public offerings (IPOs) affect firms' internal organization. We find that IPO firms become more hierarchical and standardized organizations, characterized by additional layers, more managers, smaller control spans, and larger administrative functions. These changes occur mostly in preparation for the IPO and can be only partially explained by growth. IPO firms with greater human capital risk experience larger hierarchical changes. Hierarchical changes help firms standardize employee roles and formalize internal processes. Our results suggest that firms reorganize to reduce their dependence on key individuals' human capital when transitioning to public markets.

Agency theory holds that managerial discretion over stakeholder decisions creates agency costs through altruistic redistribution. We test this claim in a principalagent experiment where agents choose effort and transfers affecting a third party under unenforceable flat-wage contracts. We find that principals set ethically constrained targets and wages that track fairness benchmarks. Agents, however, do not divert resources to stakeholders: transfers are negative on average, and prosocial traits do not increase giving. Instead, contract terms, though unenforceable, systematically shape effort, transfers, and returns. Notably, prosocial agents generate higher total returns. Prosociality appears to mitigate rather than create efficiency losses, suggesting that discretion channels norm-sensitive loyalty rather than stakeholder redistribution.

While the drastic physical impacts of climate change and related natural hazards are increasingly apparent, little is known about the long-term behavioral consequences of climate change-related experiences. Psychological evidence suggests that climate change (CC)-related experiences induce people to make more climate-friendly choices. Building on Upper Echelons Theory and relevant psychological literature, we investigate whether early-life natural hazard experiences of Chief Executive Officers (CEOs) are associated with more climate-friendly policies during their tenure. Our sample covers decisions taken between 1991 and 2018 by 447 US-born CEOs. While we observe an effect of hazard experiences on climate policies, we do not observe the same effect when focusing only on CC-related experiences. This result is robust across different measures of corporate climate performance.

I estimate management opposition to unions in terms of hiring discrimination in the German labor market. By sending 13,000 fictitious job applications, revealing union membership in the CV and pro-union sentiment via social media accounts, I provide evidence for hiring discrimination against union supporters. Callback rates are on average 15% lower for union members. Discrimination is strongest in the presence of a high sectoral share of union members and large firm size. I further explore variation in regional and sectoral strike intensity over time and find suggestive evidence that discrimination increases if a sector is exposed to an intense strike. Discrimination is positively associated with the sectoral share of firms that voluntarily orientate wages to collective agreements. These results indicate that hiring discrimination can be explained by union threat effects.

We examine how institutional saving mechanisms influence retirement saving decisions under bounded rationality and income risk. Using a life-cycle experiment with habit formation and loss aversion, we test mandatory and voluntary binding savings under deterministic and stochastic income. Voluntary commitment improves saving performance only when income is predictable; under uncertainty, it fails to improve performance. Mandatory savings do not raise total saving, as participants reduce voluntary contributions. These results emphasize the role of income smoothing in enabling behavioral interventions to improve long-term financial outcomes.

This paper examines the impact of climate risks on the debt structure of a sample of U.S. firms from 2002 through 2020. Climate risks—mainly physical, regulatory, and transition risks—are associated with a concentrated debt structure for the affected firms. However, when climate risks propagate through the channels of expected bankruptcy costs and sustainability, they are associated with a more diversified debt structure. Additionally, climate risks asymmetrically impact the relationship between access to finance and debt structure. Results from a quasi-natural experiment reaffirm the impact of climate risks on debt structure.