ecf

Empirical Research in Corproate Finance (EF8080)

Dr. Xueping WU, Dr. Shan ZHAO, Dr. Yaxuan QI, and Dr. Qianqian HUANG

Year 2019-20, Semester B

Monday 19:00-21:50

Class Room: 7-207 LAU (AC3)

Topic 8: (Dr. Zhao)

Corporate Governance: Ownership structure and the market for control

Sometimes I only list the latest papers and, if you want to read the classical papers, you can find them easily by reading those latest paper.

Readings: (important papers start with *, review papers start with @)

  1. @Becht, Marco, Patrick Bolton, and Ailsa Röell, 2003, Corporate Governance and Control, in George Constantinides, Milton Harris, and René Stulz, eds.: Handbook of the Economics of Finance (North‐Holland, Amsterdam).

  2. @Shleifer, A., and R. Vishny, 1997. A Survey of Corporate Governance, Journal of Finance 52, 737-783.

  3. @David Larcker, Brian Tayan, 2016, Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences, 2nd Edition.

  4. @The Handbook of the Economics of Corporate Governance,

https://www.elsevier.com/books/the-handbook-of-the-economics-of-corporate-governance/hermalin/978-0-444-63530-3

A . Ownership structure

  1. Demsetz, H. and K. Lehn, 1985. The Structure of Corporate Ownership: Causes and Consequences, Journal of Political Economy 93, 1155-1177.

  2. Shleifer, A. and R. Vishny, 1986, Large Shareholders and Corporate Control, Journal of Political Economy 94, 461-488.

  3. *Morck, R., Shleifer, A., and R. Vishny, 1988, Management Ownership and Market Valuation: An Empirical Analysis, Journal of Financial Economics 20, 293-315.

  4. @Holderness, C.G., 2003. A survey of blockholders and corporate control. Econ. Policy Rev. 9 (1), 51-63.

  5. @Edmans, Alex, 2015, “Blockholders and Corporate Governance,” Annual Review of Financial Economics,

  6. @Edmans, Alex, Clifford G. Holderness, 2018, Blockholders: A Survey of Theory and Evidence, Handbook of Corporate Governance

  7. He, J., J. Huang, and S. Zhao. 2019. Internalizing governance externalities: The role of institutional cross-ownership. Journal of Financial Economics.

B. The market for control

  1. *Gompers, P., J. Ishii, and A. Metrick, 2003, Corporate Governance and Equity Prices, Quarterly Journal of Economics 118, 107-155.

  2. *Bertrand, Marianne, and Sendhil Mullainathan, 2003. Enjoying the quiet life? Corporate governance and managerial preferences. Journal of Political Economy 111, 1043-1075.

  3. Shleifer, A., and L.H. Summers, 1988, “Breach of Trust in Hostile Takeovers,” in A. J. Auerbach ed., Corporate Takeovers: Causes and Consequences, Chicago, University of Chicago Press, 33-56.

  4. Stein, J., 1988 “Takeover Threats and Managerial Myopia,” Journal of Political Economy, Vol. 96, 61-80.

16. Core, J., W. Guay, and T. Rusticus, 2006, “Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Analysts’ Expectations,” Journal of Finance 61, 655-687

17. Fabisik, Kornelia and Fahlenbrach, Rüdiger and Stulz, Rene M. and Taillard, Jérôme, 2019 Why Are Firms With More Managerial Ownership Worth Less? (December 4, 2018). Fisher College of Business Working Paper No. 2018-03-024; SSRN: https://ssrn.com/abstract=3295797

Topic 9: (Dr. Zhao)

Corporate Governance: Executive compensation and boards of directors

A. Boards of director

  1. @Renée B. Adams, 2018, Boards, and the Directors Who Sit on Them, Handbook of Corporate Governance

  2. @Adams, Renee B., Benjamin E. Hermalin, and Michael S. Weisbach. 2010. The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey. Journal of Economic Literature, 48(1): 58-107.

  3. @Hermalin, B., and M. Weisbach, 2003, Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature, Federal Reserve Bank of New York Economic Policy Review 9, 7‐26.

  4. *Weisbach, M. 1988, Outside Directors and CEO Turnover, Journal of Financial Economics 20, 431-460.

  5. Hermalin, B. and M. Weisbach, 1998, Endogenously Chosen Boards of Directors and Their Monitoring of Management, American Economic Review 88, 96-118.

  6. *Yermack, D., 1996, Higher Market Valuation for Firms with a Small Board of Directors. Journal of Financial Economics 40, 185-211.

  7. Jiang, Wei, Hualin Wan, and Shan Zhao, 2015, Reputation concerns of independent directors: Evidence from individual director voting, Review of Financial Studies 29, 655-696.

B. Executive compensation

25. @Frydman, C., Jenter, D., 2010. CEO compensation. Annual Rev. Financ. Econ. 2 (1),75.102

26. @Edmans, Alex, Xavier Gabaix, and Dirk Jenter, 2017, Executive compensation: A survey of theory and evidence, Handbook of the Economics of Corporate Governance, Hermalin, B.E., Weisbach, M.S. (Eds.), Elsevier, Amsterdam,

  1. @Aggarwal, Rajesh, 2008, EXECUTIVE COMPENSATION AND INCENTIVES Handbook of EMPIRICAL CORPORATE FINANCE

  2. Jensen, M. and K. Murphy, 1990, Performance Pay and Top Management Incentives, Journal of Political Economy 98, 225-264.

  3. @ Murphy, K.,1999 Executive compensation, in O. Ashenfelter and D. Card eds., Handbook of Labor Economics, Vol. 3b, Ch. 38, 2485‐2563 (1999).

Topic 10: (Dr. Zhao) Corporate Governance: Shareholder Activism

30. @Gillan, Stuart L and Laura T. Starks, 2007, The Evolution of Shareholder Activism in the United States, Journal of Applied Corporate Finance • Volume 19 Number

31. @Denes, Jonathan M. Karpoff and Victoria B. McWilliams. Thirty Years of Shareholder Activism: A Survey of Empirical Research, Journal of Corporate Finance, 2017, 44, 405-424

32. @Yermack, D., 2010, “Shareholder Voting and Corporate Governance,” Annual Review of Financial Economics 2, 103-125.

33. @Brav, A., Jiang, W., and Kim, H., 2009, Hedge fund activism: A review, Foundations and Trends in Finance 4, 185-246.

34. @Brav, A., Jiang, W., and Kim, H., 2015b, Recent advances in research on hedge fund activism: Value creation and identification, Annual Review of Financial Economics 7, 579-595.

35. *Brav, Alon, Wei Jiang, Frank Partnoy, and Randall Thomas, 2008, Hedge fund activism, corporate governance, and firm performance, Journal of Finance 63, 1729–1775.

*McCahery, J., Sautner, Z., Starks, L.T., 2016. Behind the scenes: The corporate governance preferences of institutional investors. J. Finance.

A. Shareholder Proposals

*Gantchev, N. and M. Giannetti (2019). The costs and benefits of shareholder democracy. Working Paper, ECGI

Rik Sen, 2019, Management of Proposal

B. Hedge Fund Activism

Lucian Bebchuk, Alon Brav and Thomas Keusch, Wei Jiang, 2019, Dancing with the Activists, Journal of Financial Economics, forthcoming.

Jiang, Wei, Tao Li and Danqing Mei), Influencing Control: Jawboning in Risk Arbitrage, Journal of Finance, 2018, vol 73(6), 2635-2675.

How Does Hedge Fund Activism Reshape Corporate Innovation? (with Alon Brav, Song Ma and Xuan Tian), Journal of Financial Economics, 2018, vol. 130, 237-264.

Ian Appel, Slava Fos, Jordan Bulk, 2019 “ Public Short Selling by Activist Hedge Funds ,”

C. Mutual Funds

Appel, I., Gormley, T., Keim, D., 2018. Standing on the shoulders of giants: The effect of passive investors on activism. Review of Financial Studies

Schmidt, C., and R. Fahlenbrach. 2017. Do exogenous changes in passive institutional ownership affect corporate governance and firm value? Journal of Financial Economics 124:285–306.

D. Proxy Voting

Calluzzo, Paul, and Simi Kedia, 2019, Mutual fund board connections and proxy voting,

Journal of Financial Economics, forthcoming

He, B Kahraman, M Lowry 2018, Mutual Fund Voting on Environmental and Social Proposals, working paper

John Cohe quasi-insiders

E. Short-termism

Kapla, 2018, Are U.S. Companies Too Short-Term Oriented? Some Thoughts, Journal of Applied Corporate Finance • Volume 30 Number 4

Jiang, Wei, 2018, Who Are the Short-Termists? Journal of Applied Corporate Finance • Volume 30 Number 4

Heitor Almeida, 2018, Is It Time to Get Rid of Earnings‐per‐Share (EPS)? RCFS

Edmans, A., V. Fang, and K. Lewellen. 2017. Equity vesting and investment. Review of Financial Studies 30:2229–71.

Ladika, T., and Z. Sautner. 2019. Managerial short‐termism and investment: Evidence from accelerated option vesting. RFS

F. CSR, stakeholder relationship, and Climate change

A Dyck, KV Lins, L Roth, M Towner, HF Wagner – 2019, Insider Entrenchment and Corporate Sustainability Around the World,

Sophie A Shive, Margaret M Forster, Corporate Governance and Pollution Externalities of Public and Private Firms, The Review of Financial Studies, Volume 33, Issue 3, March 2020, Pages 1296–1330, https://doi.org/10.1093/rfs/hhz079