Working papers
Dugardin F.A. and E. Ginglinger, 2019, Gender Pay Gap, Labor Unions and Firm Performance
Using detailed employee-employer administrative data, we analyze the impact of the gender pay gap on the performance of firms and find that it depends on the presence of labor unions. When the firm is not unionized, the gender pay gap reduces profitability. In contrast, when unions are present, the gender gap has no effect on profitability in male-dominated firms and increases profitability in female-dominated firms. Our evidence suggests that when there is no union, giving priority to cohesion and pay equality is value-enhancing. In highly feminized firms, unions provide employees with the option of nonpecuniary benefits, with females opting for better work-life balance and males opting for higher salaries. Our findings indicate that in these firms, the gender pay gap may reflect the divergent interests of female and male employees and can positively affect firm value.
We study the impact of board gender quotas on firms’ hiring and retention practices. We find that female director retention rates increase following the introduction of a quota in France in 2011, with stronger effects observed among less gender-diverse firms and firms that regularly employ directors who are members of the French business elite. We also find that female directors hired after the quota are more independent, more experienced, more internationally diverse, and no less academically qualified than those hired before the quota. The gender gaps in most director characteristics have also narrowed. The evidence suggests that the introduction of a board gender quota forces firms to adopt alternative hiring practices, which may allow them to tap into a deeper talent pool.
Ginglinger E., C. Hebert and L. Renneboog, 2018, Are investors aware of ownership connections? (EFMA 2018 Conference: LARRY LANG Best Paper Award in Corporate Finance)
We examine the market reactions to earnings announcements within a parent-subsidiary ownership structure. We find that the parents’ investors react to all announcements within the group either immediately or with delay, whereas subsidiaries’ investors only react to their own firm’s announcements, ignoring predictive information released by the parent. Multiple announcements within a group lead to enhanced transparency for parents’ investors, who benefit from detailed information on the origin of their firm’s earnings. In contrast, subsidiaries’ investors appear unaware of ownership links, and behave as inattentive investors. Inattention is worsened by geographical diversification of affiliated firms and by indirect ownership, but cannot be explained by strategic timing of the disclosure of earnings surprises, day-of-the-week effect or seasonality, internal capital markets, or synergy-related explanations across industries. Institutional investors do not seem to be smarter at understanding group structures, with the exception of active investors owning shares in both parent and subsidiary companies.
Permanent working papers
Ginglinger E. and K. Saddour, 2012, Cash holdings, corporate governance and financial constraints
We examine the relation between cash holdings, corporate governance and financial constraints. We find that firms with weak shareholder rights hold less cash, in contrast to the predictions of agency theory. This result is partly due to the positive correlation that exists between shareholder rights measures and the degree of financial constraint faced by the firm. We show that control enhancing mechanisms reduce cash holdings of financially constrained firms. Control/ownership deviation gives these firms extra flexibility, enabling them to issue shares without blockholders losing control, and provides an alternative to high cash holdings.
In this article, we look at two competing hypotheses to explain IPO underpricing in France when a seasoned offering follows the IPO. The first hypothesis assumes that the initial underpricing is a signal from a high quality firm in the anticipation of a subsequent equity issue at a higher price. The second competing hypothesis assumes that the market transmits to managers their valuation of the company. Our database examines two types of subsequent risky issuances: on the one hand, stocks and on the other hand, hybrid issuances (such as convertible bonds, bonds with attached warrants, and stocks with attached warrants). Further, in the French market, firms may be introduced through different mechanisms, which are not equally compatible with both hypotheses. We show that the initial underpricing is greater if a stock issuance rather than other security offerings of a convertible nature subsequently follow the IPO. We find evidence in favor of the signaling hypothesis in the case of fixed price IPOs. For the auction-like procedures, we show that the initial investors' demand, rather than post-IPO performance, determines the type of security that is issued, but has no effect on the financing decision itself. The market feedback hypothesis is therefore only weakly supported: a poor market message does not keep managers from expanding, but rather encourages them to use stage financing rather than straight equity.