Faculty & Research

Ellen Engel

Adjunct Professor of Accounting

Phone :
1-773-834-0966
Address :
5807 South Woodlawn Avenue
Chicago, IL 60637

Ellen Engel studies corporate governance, performance measurement, and the role of accounting information in providing executive incentives and compensation. Among her publications are “CEO and Board Chair Roles: To Split or Not to Split?” written with A. Dey and X. Liu which appeared in the Journal of Corporate Finance in 2011; “Audit committee compensation and the demand for monitoring of the financial reporting process,” written with R. Hayes and X. Wang, which appeared in the Journal of Accounting and Economics in 2010; "The Sarbanes-Oxley Act and Firms' Going-Private Decisions," written with R. Hayes and X. Wang, which appeared in the Journal of Accounting and Economics in 2007; "An Analysis of the Relation Between the Stewardship and Valuation Roles of Earnings," written with R. Bushman, J. Milliron, and A. Smith, which appeared in the Journal of Accounting Research in 2006; She is also the co-author with E. Hirst and M. L. McAnally of Cases in Financial Reporting (7th edition) – a casebook for graduate study in financial reporting courses.

Engel serves as an ad hoc reviewer for the above publications and numerous others, including Accounting Horizon, the Accounting Review, Contemporary Accounting Research, Financial Management, the Journal of Accounting, Auditing and Finance, the Journal of Accounting and Economics, the Journal of Business, the Journal of Law, Economics and Organizations, and Managerial Finance.

She received the American Tax Association 2002 Manuscript Award for significant contribution to tax literature for "Debt-Equity Hybrid Securities," published in the Journal of Accounting Research. Engel received a Kaufmann Faculty Research Grant in 2005 and 2000 and an FMC Corporation Faculty Fellowship in 2000. She joined the Chicago Booth faculty in 1996.

Engel earned a PhD in accounting from Stanford University in 1997, an MBA with concentrations in finance, statistics, and policy studies from Chicago Booth in 1991, and a bachelor's degree summa cum laude in accounting from the University of Detroit Mercy in 1983. She is a CPA in the state of Michigan. Before earning an MBA, she worked as audit manager and consultant for Plante & Moran CPAs and Management Consultants for eight years.

 

Other Interests

Family, baseball, skiing, tennis, drinking tea.

 

Research Activities

Corporate governance; performance measurement; role of accounting information in providing executive incentives and compensation.

With A. Dey and X.Liu, “CEO and Board Chair Roles: To Split or Not to Split?,” Journal of Corporate Finance (2011).

With R. Hayes and X. Wang, "Audit committee compensation and the demand for monitoring of the financial reporting process," Journal of Accounting and Economics (2010).

With R. Hayes and X. Wang, "The Sarbanes-Oxley Act and Firms' Going-Private Decisions," Journal of Accounting and Economics (2007).

With R. Bushman, J. Milliron, and A. Smith, "An Analysis of the Relation Between the Stewardship and Valuation Roles of Earnings," Journal of Accounting Research (2005).

With R. Hayes and X. Wang, "CEO Turnover and Properties of Accounting Information," Journal of Accounting and Economics (2004).

With R. Bushman, Q. Chen, and A. Smith, "Financial Accounting Information, Organizational Complexity and Corporate Governance Systems," Journal of Accounting and Economics (2004).

For a listing of research publications please visit ’s university library listing page.

REVISION: Chief Financial Officer Succession and Corporate Financial Practices
Date Posted: Sep  03, 2014
We examine determinants and performance consequences of Chief Financial Officer (CFO) successions in years 2002-2008. We argue that if internal monitoring mechanisms are effective, forced CFO departures are more likely in firms with poor financial practices, followed by improvements in these financial practices. We find that (1) the probability of forced CFO turnover is associated with incidences of accounting restatements, internal control weaknesses, receipt of SEC comment letters, and late regulatory filings; (2) CFO successions following forced turnover are associated with subsequent improvements in these financial outcomes. Collectively, our empirical evidence is consistent with the notion that board monitoring of CFOs is effective in holding CFOs accountable for their specific financial reporting and regulatory duties and in choosing successor CFOs that are equipped to address failures in financial practices and outcomes.

REVISION: CEO and Board Chair Roles: To Split or Not to Split
Date Posted: Jan  29, 2010
We document that firms that are larger, have stronger governance and more able CEOs are more likely to combine CEO and board chair roles (i.e., duality). We also document that firms that split these roles have significantly lower announcement and post-announcement returns, and lower contributions of investments to shareholder wealth. This result is more pronounced for firms that split due to investor pressure, and performance outcomes are more negative for firms with higher predicted values of d

New: Audit Committee Compensation and the Demand for Monitoring of the Financial Reporting Process
Date Posted: Aug  28, 2009
We examine the relation between audit committee compensation and the demand for monitoring of the financial reporting process. We find that total compensation and cash retainers paid to audit committees are positively correlated with audit fees and the impact of the Sarbanes-Oxley Act, our proxies for the demand for monitoring. Our results are robust to the inclusion of audit committee quality, measured as the committee chair financial expertise. Our results suggest a recent willingness by fi

Debt-Equity Hybrids
Date Posted: Feb  18, 2009
This paper examines debt-equity hybrid securities whose existence and popularity appear to be due to their favorable accounting and tax treatment. Marketed under names such as Monthly Income Preferred Securities (MIPS), these securities are treated as equity-like for financial reporting and regulatory purposes, yet are treated as debt for tax purposes. In the four years since their creation, MIPS have largely replaced traditional preferred stock as a source of new capital, and many firms have en

Discussion of Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
Date Posted: May  08, 2006
No abstract available.

The Sarbanes-Oxley Act and Firms' Going-Private Decisions
Date Posted: May  28, 2004
We investigate firms' going-private decisions in response to the passage of the Sarbanes-Oxley Act of 2002 (SOX). The Act has the potential to bring both benefits, in terms of more transparent disclosure and improvements in corporate governance, and costs, in terms of complying with the new regulation. We argue that firms go private in response to SOX only if the SOX-imposed costs to the firm exceed the SOX-induced benefits to shareholders, and this difference swamps the net benefit of being a p

CEO Turnover and Properties of Accounting Information
Date Posted: Mar  03, 2004
Multiple-performance-measure agency models predict that optimal contracts should place greater reliance on performance measures that are more precise and more sensitive to the agent's effort. We apply these predictions to CEO retention decisions. First, we develop an agency model to motivate proxies for signal and noise in firm-level performance measures. We then document that accounting information appears to receive greater weight in turnover decisions when accounting-based measures are more p

CEO Turnover and Properties of Accounting Information
Date Posted: Dec  16, 2003
Multiple-performance-measure agency models predict that optimal contracts should place greater reliance on performance measures that are more precise and more sensitive to the agent's effort. We apply these predictions to CEO retention decisions. First, we develop an agency model to motivate proxies for signal and noise in firm-level performance measures. We then document that accounting information appears to receive greater weight in turnover decisions when accounting-based measures are more p

Debt-Equity Hybrid Securities
Date Posted: May  21, 2003
Trust preferred stock, first issued in 1993, was engineered to be treated as preferred stock for financial statement purposes and as debt for tax purposes (i.e., payments on trust preferred stock are deductible by the issuer). Our analyses exploit the features of trust preferred stock to shed light on three issues: 1) the extent to which firms incur costs to manage the balance sheet classification of a security; ii) the magnitude of tax benefits, if any, associated with leverage increasing capit

Debt-Equity Hybrid Securities
Date Posted: Jan  21, 2002
Trust preferred stock, first issued in 1993, was engineered to be treated as preferred stock for financial statement purposes and as debt for tax purposes (i.e., payments on trust preferred stock are deductible by the issuer). Our analyses exploit the features of trust preferred stock to shed light on three issues: 1) the extent to which firms incur costs to manage the balance sheet classification of a security; ii) the magnitude of tax benefits, if any, associated with leverage increasing capi

Incentives and Governance in Entrepreneurial Firms
Date Posted: Jun  18, 2001
This paper analyzes corporate governance decisions at firms making initial public offerings (IPOs) of common stock between 1996 and 1999. Our objective is to examine relationships between firms' corporate governance practices and the quality and availability of accounting- and market-based measures of firm performance. We collect a sample of 464 companies from the manufacturing, internet, and technology (non-internet) industries, and examine how CEO incentives vary with industry and with the ext

The Sensitivity of Corporate Governance Systems to the Timeliness of Accounting Earnings
Date Posted: Oct  13, 2000
The purpose of this paper is to investigate how governance systems of large public U.S. corporations vary with information properties of numbers produced by their financial accounting systems. We argue that in firms whose current accounting numbers do a relatively poor job of capturing the effects of the firm's current activities and outcomes on shareholder value, the accounting numbers are less effective in the governance setting. We predict that such firms will substitute costly governance m

An Analysis of the Relation Between the Stewardship and Valuation Roles of Earnings
Date Posted: May  25, 2000
We develop an agency-based model that provides a direct theoretical connection between compensation-earnings sensitivities (CERCs) and value-earnings sensitivities (ERCs). The model predicts that CERCs are increasing in ERCs. This relation between valuation and stewardship derives from the fact that the capitalization rate of earnings into value also influences the marginal product of current period actions that impact current earnings. Our empirical tests of the model provide evidence of a posi

An Empirical Investigation of Trends in the Absolute and Relative Use of Earnings in Determining Cas...
Date Posted: Jan  06, 1999
The purpose of this paper is to provide evidence on whether there have been changes over time in the compensation-earnings relation. We investigate whether there is a trend during the period 1971-95 in the sensitivity of executive pay to reported earnings and in the importance of earnings relative to other information in explaining executive pay. As addressed in Gjesdal [1981] and in the model we develop, the relevance of a performance measure for valuing the firm may not be the same as its rele


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