Teacher quality is widely believed to be important for education, despite little ev-idence that teachers ’ credentials matter for student achievement. To accurately measure variation in achievement due to teachers ’ characteristics–both observ-able and unobservable–it is essential to identify teacher fixed effects. Unlike previous studies, I use panel data to estimate teacher fixed effects while control-ling for fixed student characteristics and classroom specific variables. I find large and statistically significant differences among teachers: a one standard deviation increase in teacher quality raises reading and math test scores by approximately.20 and.24 standard deviations, respectively, on a nationally standardized scale. In addition, teaching experience has statistically significant positive effects on reading test scores, controlling for fixed teacher quality.

views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Economists have long puzzled over the astounding differences in productivity between firms and countries. For example, looking at disaggregated data on U.S. manufacturing industries, Syverson (2004a) found that plants at the 90th percentile produced four times as much as the plant in the 10th percentile on a per-employee basis. Only half of this difference in labor productivity could be accounted for by differential inputs, such as capital intensity. Syverson looked at industries defined at the four-digit level in the Standard Industrial Classification (SIC) system (now the North American Industry Classification System or NAICS) like “Bakeries and Tortilla Manufacturing ” or “Plastics Product Manufacturing. ” Foster, Haltiwanger, and Syverson (2008) show large differences in total factor productivity even within very homogeneous goods industries such as boxes and block ice. Some of these productivity differences across firms and plants are temporary, but in large part they persist over time. At the country level, Hall and Jones (1999) and Jones and Romer (2009) show how the stark differences in productivity across countries account for a substantial fraction of the differences in average per capita income. Both at the plant level and at the national level, differences in productivity are typically calculated as a residual—that is, productivity is

in the Federalist Papers (#57): “The aim of every political Constitution, is or ought to be, first to obtain for rulers men who possess most wisdom to discern, and most virtue to pursue, the common good of society; and in the next place, to take the most effectual precautions for keeping them virtuous whilst they continue to hold their public trust. ” The second issue that Madison identifies – that is, the need to get institutional incentives right so that politicians act in the public interest – has been studied at length. But the first issue – the need to form a political class that is competent and honest enough to discharge its duties – has received far less attention. Yet many of the problems of government, especially those in emerging democracies, arise because the political class uses the state for self-dealing. Any institutional improvements that try to rein in their proclivities can have only a limited impact as long as policymakers are individuals who are intent on using public office for self-enrichment. Democratic theorists have long recognized that the state functions in the context of a nexus of values which restrain narrow self-interest. One of the key roles of elections is to uphold those values, both by disciplining politicians and providing a means

I find that the market reaction to a merger and acquisition (M&A) announcement predicts whether the companies later consummate the deal. The relation cannot be explained by the market’s anticipation of the closing decision or its perception of the deal quality at the announcement. Merging companies appear to extract information from the market reaction and later consider it in closing the deal. Furthermore, the relation varies with deal characteristics, suggesting that companies seem to have a higher incentive to learn from the market when canceling the announced deal is easier or when the market has more information that the companies do not know. IMAGINE AFTER PRIVATE NEGOTIATIONS, the CEOs of two companies conclude that a merger will create value. They then reach a deal and announce it to the public. Outside investors, however, disagree with the proposed merger after being in-formed. They believe that the managers have overlooked certain weaknesses of the plan, and if carried out, it will reduce the total value of the two companies. The investors express their opposition in many ways, including trading down

This article concerns the real-world importance of leader-ship for the success or failure of organizations and social institutions. The authors propose conceptualizing leader-ship and evaluating leaders in terms of the performance of the team or organization for which they are responsible. The authors next offer a taxonomy of the dependent variables used as criteria in leadership studies. A review of research using this taxonomy suggests that the vast empirical literature on leadership may tell us more about the success of individual managerial careers than the success of these people in leading groups, teams, and organizations. The authors then summarize the evidence showing that leaders do indeed affect the performance of organizations—for better or for worse—and conclude by describing the mechanisms through which they do so.

This article incorporates well-documented managerial traits into a tradeoff model of capi-tal structure to study their impact on corporate financial policy and firm value. Optimistic and/or overconfident managers choose higher debt levels and issue new debt more often but need not follow a pecking order. The model also surprisingly uncovers that these manage-rial traits can play a positive role. Biased managers ’ higher debt levels restrain them from diverting funds, which increases firm value by reducing this manager-shareholder conflict. Although higher debt levels delay investment, mildly biased managers ’ investment deci-sions can increase firm value by reducing this bondholder-shareholder conflict. I.

Can managers have an impact on their firm that goes beyond their direct actions and decisions? This article shows that a manager with strong beliefs about the right course of action will attract, through sorting in the labor market, employees with similar beliefs. This alignment of beliefs gives direction to the firm and has important implications for incentives and coordination. The article then defines vision, in accordance with the management literature, as a strong belief about the right course of action, and shows that it may be optimal to hire managers with such strong beliefs. Vision will be most important when uncertainty is high and actions are difficult to contract on.

In 2006, Norway imposed a quota requiring that the boards of directors of public limited companies be composed of at least 40 percent female members. Governments across Europe have since adopted or proposed similar rules. This paper examines the impact of the Norwegian quota on the management style of affected firms by comparing them to other Scandinavian companies, public and private, that were unaffected by the rule. Based on differences-in-differences and triple-difference models, we find that firms affected by the quotas undertook fewer workforce reductions than comparison firms, increasing relative labor costs and employment levels and reducing short-term profits. There is no evidence of preexisting trends, and the effects are strongest among firms that had no female board members before the quota was introduced. The boards appear to be affecting corporate strategy in part by selecting likeminded executives. The results are consistent with changes in board composition affecting corporate governance and strategy, and with prior research suggesting that female managers may be more stakeholder or long-term oriented than their male counterparts.

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