Welcome to my web page. I am currently working as a Post-Doctoral Research Fellow at the Geneva Finance Research Institute, which is part of the University of Geneva. I hold a PhD in Economics from the Toulouse School of Economics. My thesis advisor was Bruno Biais. Contact details: Curriculum Vitae: Research Interests: Working Papers: The WACC Fallacy: The Real Effects of Using a Unique Discount Rate (with Augustin Landier and David Thesmar) **NEW** Larry Lang Corporate Finance Best Paper Award, EFMA Annual Meeting 2011, Braga (Portugal) , June 22-25, 2011. We document investment distortions induced by the use of a single discount rate within firms. According to textbook capital budgeting, firms should value any project using a discount rate determined by the risk characteristics of the project. If they use a unique company-wide discount rate, they overinvest (resp. underinvest) in divisions with a market beta higher (resp. lower) than the firm's core industry beta. We directly test this consequence of the "WACC fallacy'' and establish a robust and significant positive relationship between division-level investment and the spread between the division's market beta and the firm's core industry beta. Consistently with bounded rationality theories, this bias is stronger when the measured cost of taking the wrong discount rate is low, for instance, when the division is small. Finally, we measure the value loss due to the WACC fallacy in the context of acquisitions. Bidder abnormal returns are higher in diversifying mergers and acquisitions in which the bidder's beta exceeds that of the target. On average, the present value loss is about 0.7% of the bidder's market equity.
Social Responsibility and the Board of Directors (Latest Version: May 2010) Best student paper award at the United Nations Principles of Responsible Investment Academic Conference, Copenhagen, 5-7 May 2010. What is the relationship between social responsibility and corporate governance? To shed light on this issue, I examine whether and how positive and negative social responsibility events relate to characteristics of a firm's board of directors. In doing so, I rely on an unbalanced panel data set of 2417 publicly listed US firms between 1999 and 2007 for which I observe the occurrence of social responsibility events and director characteristics. When boards include a higher fraction of inside and experienced directors, negative events are less frequent. In line with experimental evidence that women are more concerned with altruism, I also document that firms with a higher fraction of women on the board show more pro-social behavior. Finally, when directors have low equity ownership, positive events are less frequent.
This paper examines the relationship between incidents of social responsibility (positive and negative) and shareholder value in an event study setting. I find significant negative abnormal returns when third parties such as newspapers, non-governmental organizations or regulatory authorities publicly report about negative social responsibility. Negative returns are particularly strong for information concerning product safety and the firm's impact on communities and the wellbeing of employees. In contrast, positive news does not generate a systematic reaction. Analyzing positive events in greater detail, I nonetheless identify two causal mechanisms relating positive social responsibility and shareholder value. On the one hand, events containing signals about past and likely future economic performance bring about positive abnormal returns. As such, charitable donations to communities and profit distribution to employees are rewarded by investors. On the other hand, positive events indicative of higher company expenses due to the use of alternative energy or (non)-monetary benefits to employees generate a significantly negative reaction. Work in progress: Stakeholder Relations and Ownership Structure
|
