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Anzhela Knyazeva 


BIO


Anzhela Knyazeva is a Senior Financial Economist in the Division of Economic and Risk Analysis at the SEC. Her research area is in corporate finance. Her research has examined boards of directors, payout policy, crowdfunding, financing decisions, acquisitions, bank lending, institutional investors, labor markets, and international finance. Her work has been published in the Journal of Financial Economics, Review of Financial Studies, Journal of Corporate Finance, and Journal of Banking and Finance

Prior to her current role, she was on the finance faculty at the University of Rochester's Simon School of Business, where she taught International Economics & Finance and Investments classes to full-time and part-time MBA and MS students and served as the Faculty Director of the Full-Time MS in Finance program.

She is the recipient of SEC Law & Policy Honorary Award, DERA Director's Award, Special Act awards for economic analysis in rulemaking and economic research, Simon School of Business Superior Teaching Awards and Teaching Honor Rolls, and Stern School of Business PhD Teaching Excellence Award.

She holds a PhD degree in Economics from New York University's Stern School of Business and a Master's degree in International Policy Studies from Stanford University.

E-mail: anzhela.knyazeva at gmail.com.

 

RESEARCH

 

[Google Scholar] [SSRN]


INTERESTS

Payout Policy, M&A, Financing Decisions, Corporate Governance, Banking, International Finance



PUBLICATIONS


Financial innovation in microcap public offerings (including online appendix), 2018, Journal of Banking and Finance (in-press).

"This paper examines external financing of small and growth firms using a regulatory experiment in the US microcap market. The paper focuses on a new financing method for entrepreneurial firms – small public offerings under Regulation A, which was significantly expanded by 2015 amendments. Regulation A offerings serve as a financing alternative for issuers that seek public capital but are unable to conduct a traditional registered public offering. Compared to small registered public offerings, Regulation A involves fewer requirements and draws smaller, younger companies, often raising capital without intermediaries or on a best efforts basis. Regulation A companies raise less capital on average after accounting for their historical financials. The use of Regulation A increased significantly following the 2015 shock, particularly in market segments that had more private placements and traditional public offerings. Different types of issuers are pursuing Regulation A and registered offerings, and Regulation A does not appear to draw issuers away from traditional public offerings."


Investor heterogeneity and trading (with D. Knyazeva and L. Kostovetsky), 2018, European Financial Management, 24(4), 680718; online appendix

"This paper examines the impact of investor heterogeneity on trading. Institutional investors play a crucial role in the information environment of firms. We argue that heterogeneity in the information ability of institutional investors has a significant impact on trading around information releases. We propose novel measures of within-firm investor heterogeneity and find that investor heterogeneity increases abnormal trading volume around news, holding constant the average levels of investor sophistication. We also find larger spread reductions around announcements for firms with greater investor heterogeneity. The effect of investor heterogeneity on trading around news continues to hold after accounting for total institutional ownership, the presence certain types of institutional investors, and analyst coverage."

 

Employee rights and acquisitions (with K. John and D. Knyazeva), 2015, Journal of Financial Economics, 118(1), 4969.

"This paper examines the outcomes of corporate acquisitions from the perspective of stakeholder-shareholder agency conflicts. Using state variation in labor rights laws, we find that acquirers with strong labor rights experience lower announcement returns. The effect can be attributed to such acquirers pursuing deals that are not in the best interest of the acquirer’s shareholders. The negative effect of strong labor rights on acquirer returns and (combined acquirer and target announcement returns) remains after we control for a range of deal and target characteristics, consistent with employee-shareholder agency conflicts limiting shareholder gains and synergies from the acquisition."
discussion on the Harvard Law School blog

 

Governance and payout precommitment (with K. John and D. Knyazeva), 2015, Journal of Corporate Finance, 33, 101–117.

(previously circulated as "Payout policy, agency conflicts, and corporate governance" and "Corporate governance and payout commitments")

"We examine how firms structure payout and debt commitments to address governance weaknesses. Firms with severe agency conflicts precommit through a combination of dividends and debt or through dividends rather than debt alone. Such firms also shift their shareholder payouts towards regular quarterly dividends – a stronger commitment than special dividends or repurchases. Although dividend commitments are implicit, event study evidence supports their credibility and value-relevance for firms with weak governance. Despite harsher penalties, debt alone cannot replace shareholder payouts as a means of addressing managerial agency conflicts."

Discussion of the paper in the CFA Digest 2015, Vol. 45, Issue 12

 

The supply of corporate directors and board independence (with D. Knyazeva and R. Masulis), 2013, Review of Financial Studies 26(6), 1561–1605.

(previously circulated as “Effects of local director markets on corporate boards” and “Local director talent and board composition”)

"Empirical evidence on the relations between board independence and board decisions and firm performance is generally confounded by serious endogeneity issues. We circumvent these endogeneity problems by demonstrating the strong impact of the local director labor market on board composition. Specifically, we show that proximity to larger pools of local director talent leads to more independent boards for all but the largest quartile of S&P 1500. Using local director pools as an instrument for board independence, we document that board independence has a positive effect on firm value and operating performance and the CEO fraction of incentive-based pay and turnover."

discussion on the Harvard Law School blog

 

Does being your bank’s neighbor matter? (with D. Knyazeva), 2012, Journal of Banking and Finance 36(4), 1194–1209.

"This paper provides new evidence on the role of distance between banks and borrowers in bank lending. We argue that delegated monitors face higher costs of collecting information about nonlocal borrowers due to the difficulty of obtaining and verifying soft information over distances. Further, the higher information collection and monitoring costs associated with distance should be reflected in loan terms. Empirically, loan spreads are increasing in the distance between borrowers and lenders. Finally, banks are more likely to include covenant provisions or require collateral when lending to borrowers located far away."

 

Ownership change, institutional development, and performance (with D. Knyazeva and J.E. Stiglitz), 2013, Journal of Banking and Finance 37(7), 2605–2627.

"This paper conducts a cross-country empirical study of the impact of institutions and agency conflicts on ownership reforms and their implications for changes in performance and efficiency. We examine two main questions. First, we evaluate the effects of certain property rights and institutional quality measures on performance and efficiency. We find that property rights and contracting rights protections contribute to stronger post-privatization performance. Second, we ask whether sectors undergoing changes from state to private ownership exhibit better or worse performance than sectors remaining public. We find an insignificant effect of privatization in ordinary least squares estimates and a negative short-term effect after correcting for endogeneity of privatization decisions that disappears in the long run, consistent with recently privatized enterprises facing short-run costs of restructuring and the challenges of mitigating agency and expropriation concerns."

Discussion of the paper in the CFA Digest  2013, Vol. 23, Issue 3

 

Product market competition and shareholder rights: international evidence (with D. Knyazeva), 2012, European Financial Management 18(4), 663–694.

"This paper examines the interaction between product market competition and international differences in shareholder rights in relation to firm performance and corporate policies. In contrast to existing literature, we provide evidence of complementarities between product market competition and country shareholder rights protections. The benefits of shareholder rights protections for firm performance are conditional on the presence of a competitive industry environment. We find that stronger shareholder rights protections are associated with better firm performance in competitive industries. However, this relation is not significant in concentrated industries. Consistent results are obtained from the analysis of key corporate policies."
 

Does geography matter? Firm location and corporate payout policy (with K. John and D. Knyazeva), 2011, Journal of Financial Economics 101(3), 533–551.

(previously circulated as "Do shareholders care about geography?")

"We investigate the impact of geography on agency costs and firm dividend policies. We argue that remote firm location increases the cost of shareholder oversight of managerial investment decisions. We hypothesize that remotely located firms facing free cash flow problems precommit to higher dividends to mitigate agency conflicts. We find that remotely located firms pay higher dividends. As expected, the effect of geography on dividends is most pronounced for firms with severe free cash flow problems. Further, remotely located firms rely more on regular dividends instead of special dividends or share repurchases and decrease dividends less often."

  

Ownership changes and access to external financing (with D. Knyazeva and J.E. Stiglitz), 2009, Journal of Banking and Finance 33(10), 1804–1816.

"This paper examines access to external financing in the privatization context and provides new evidence on the effects of financing constraints on performance and investment. Ownership reforms increase firms’ reliance on external financing. Empirically, performance and investment changes around ownership reforms are increasing in country-level measures of access to credit. The presence of a severe prior public financing constraint contributes to stronger investment growth after privatization. Privatized enterprises do not outperform publicly owned industries, all else given. Our analyses rely on new international sector- and firm-level data and correct for potential endogeneity of ownership changes."

 

Crises and contagion: A survey (with D. Knyazeva and J.E. Stiglitz), 2012, In Lucey, B., Larkin, C. (Eds.): What if Ireland Defaults? Orpen Press. 

Adaptation published in Europe on the Brink; Debt Crisis and Dissent in the European Periphery, 2014, Phillips, T. (Ed.), Zed Books; A Europa à Beira do Abismo, 2014, Phillips, T. (Ed.), Bertrand; Bajo el Yugo Neoliberal: Crisis de la Deuda y Disidencias en las Periferias Europeas, 2016, Phillips, T. (Ed.), Akal.



WORKING PAPERS


Sinner or saints? Top underwriters, venture capitalists, and IPO underpricing (with K. John and D. Knyazeva), working paper, 2018

"This paper examines strategic interactions between venture capitalists (VCs) and top underwriters in the IPO process. We test two contrasting hypotheses: certification and rent extraction. On the one hand, the joint involvement of VCs and top underwriters can amplify their certification effect, reducing IPO underpricing. On the other hand, the rent extraction incentives of VCs and top underwriters, particularly in a repeated dealing context, can increase underpricing. We test these contrasting effects on IPO underpricing in the cross-section and around two regulatory shocks. First, VC-backed IPOs, VC-backed deals with top underwriters, and deals with stronger VC-underwriter ties exhibit greater underpricing. The cross-sectional results continue to hold in two-stage least squares estimation with geographical instruments. Second, the 2012 JOBS Act decreased disclosures by issuers and increased informational asymmetry. We find that IPO underpricing increased among VC-backed IPOs involving top underwriters after the JOBS Act. Third, a 2003 NASD rule limited explicit rents that may be extracted from preferential allocations of new IPO issues. We find that VC-backed IPO underpricing declined after the shock, and the effect was concentrated among VC-backed deals involving top underwriters and VCs with ties to underwriters. Importantly, we find no effect of top underwriters alone unless a VC is also involved. The observed decline in IPO underpricing cannot be explained by analyst involvement or the passage of Regulation FD. Moreover, repeat dealing between large institutions and underwriters similarly increases underpricing, but the effect does not explain the role of VC-underwriter ties and does not decline after the 2003 shock. Overall, our results support rent extraction, shed new light on the effects of VC backing, underwriters, and institutions on IPO underpricing, and emphasize the role of strategic interactions between them in the post-dot-com period." 


Foreign issuer puzzle in emerging growth company IPOs (with R. Gullapalli), working paper, 2017.

"In this paper we examine emerging growth company (EGC) IPOs involving foreign issuers. The prominence of foreign issuers in the US IPO market has grown significantly over time. Although foreign issuers are provided separate relief if they qualify as foreign private issuers, a number of foreign issuers undertaking IPOs also relied on EGC status, introduced under the JOBS Act of 2012 to obtain additional disclosure and offering process accommodations. Recent research has found significantly higher underpricing among EGC IPOs of domestic issuers. We complement and extend existing evidence by focusing on foreign issuers. We find systematic differences between the effects of EGC status for domestic and foreign issuers. In particular, after controlling for issuer and deal characteristics, foreign EGC issuers experience lower – rather than greater – underpricing, compared to non-EGC issuers. Foreign issuers, regardless of EGC status, incur lower gross spreads, all else equal. Foreign filers incur higher compliance costs, which are partly mitigated by being an EGC issuer. The differential findings suggest that EGC relief and foreign private issuer relief interact in their effects on the information asymmetry in IPOs."


Soft and hard information and signal extraction in securities crowdfunding (with V. Ivanov), working paper, 2017.

"We examine the impact of information flows on financing and the relative roles of hard information, soft information, and certification of issuer quality by third parties, using novel evidence from the US securities-based crowdfunding market. While hard information about the issuer’s financial condition and experience has only marginal relevance for offering outcomes, third-party certification of issuer quality as well as soft information about the issuer in the form of social media and crowdfunding platform communications plays a significant role in crowdfunding offerings. The relative roles of hard information and certification are greatest in offerings of more information-sensitive securities and when investors are less likely to derive nonpecuniary returns from participating in an offering. Further, there is evidence of partial substitution between different signals of issuer quality. Both third-party certification and issuer social media following are positively related to the valuation obtained by the issuer. Issuers tailor deal features, specifically, the choice of funding target flexibility and offering duration, to the level of information asymmetry about issuer quality. Finally, there is some evidence of geographic matching, with issuer characteristics and local availability of platforms affecting distance between issuers and platforms."


Creditor rights and aggregate factors in lending terms (with D. Knyazeva and J.E. Stiglitz), working paper.

"It is well known that conflicts of interests between borrowers and creditors can raise the cost of external financing. In this paper we provide new evidence that borrower-creditor conflicts of interests also affect the sensitivity of debt financing to aggregate business conditions. In the presence of incomplete contracts, creditors cannot fully observe or verify diversion of free cash flow by borrowers. Whereas strong creditor rights impose a high cost on defaulting borrowers, weak creditor rights enable borrowers to divert cash flows and avoid repayment more easily. When creditors cannot enforce their rights and assure repayment regardless of the individual borrower’s underlying financial condition, creditors may choose to rely more on verifiable, aggregate information in their lending decisions, resulting in less discriminate loan pricing. Alternatively, creditors with few protections may resort to more borrower-specific information gathering in an effort to select the best borrowers and mitigate conflicts of interest. We test these contrasting predictions in a sample of international and domestic syndicated bank loans. Based on our analysis of international and domestic syndicated bank loans and country- and state-level variation in creditor rights, we find that industry factors have a larger impact on loan spreads and other terms when creditor protections are weak. The findings demonstrate a new channel for the effect of conflicts of interest on bank lending and yield important implications for lenders, borrowers, efficiency of capital allocation, and systemic risk."

 

Firm complexity: the 'dark side' of geographic diversification (with D. Knyazeva), working paper, 2017.

"In this paper we analyze firm geographic complexity and its implications for credit risk using a unique new dataset with granular geographic segment information and credit quality scores. After accounting for determinants of geographic diversification, we find that geographically complex firms are characterized by significantly lower credit quality than their focused peers. Overall, greater geographic complexity increases credit risk, consistent with geographically disperse firms facing higher information and monitoring costs that may exacerbate information asymmetries and intra-firm capital allocation inefficiencies. The evidence is inconsistent with geographic diversification decreasing credit risk through diversification of cash flows. The identified effects are economically important for potential lenders. The results hold for firms of varying size and cannot be explained by business diversification or other firm, industry, and local area factors and firm fixed effects."


Dividend smoothing: an agency explanation and new evidence (with D. Knyazeva), permanent working paper.


Dissimilar directors on corporate boards (with D. Knyazeva and C. Raheja), permanent working paper.

(previously circulated as "The benefits of focus vs. heterogeneity: An analysis of corporate boards")
 

Comovement in investment (with D. Knyazeva, R. Morck, and B. Yeung), permanent working paper.


RESEARCH IN PROGRESS


Investor inattention (with V. Ivanov and D. Knyazeva)


Diversity in corporate teams (with L. Naveen and D. Knyazeva)


Intermediaries in private offerings (with R. Gullapalli and V. Ivanov)


Does transparency matter? (with D. Knyazeva)


WHITE PAPERS


U.S. securities-based crowdfunding under Title III of the JOBS Act (with V. Ivanov), DERA white paper 2017


Regulation A+: what do we know so far? DERA white paper 2016


SELECTED PRESENTATIONS

2018: UT San Antonio, College of William & Mary (co-author), Securities and Exchange Commission, Conference on Financial Market Regulation, 2nd Emerging Trends in Entrepreneurial Finance Conference, Financial Management Association European meeting (co-author), P2P Financial Systems International Workshop, UNSW (co-author), George Mason University (scheduled), Financial Management Association (co-author - scheduled)

2017: SEC-NYU Dialogue on Crowdfunding (co-author), SEC-NASAA Conference (panelist), NYU Economics Alumni Conference, Market Structure Conference: Market Microstructure & Capital Formation (FINRA / Columbia University), Securities and Exchange Commission

2016: American Economic Association (panelist), Financial Management Association (panelist)

2015: International Banking, Economics and Finance Association (co-author), Conference on Investor Protection, Corporate Governance, and Fraud Prevention at George Mason University School of Business, George Washington University (co-author), NYU Economics Alumni Conference

2014: Securities and Exchange Commission, Federal Reserve Bank of Boston, Office of Comptroller of the Currency, Federal Deposit Insurance Corporation (co-author), American University

2013: European Finance Association (co-author), European Financial Management Association, University of Iowa, George Washington University, Michigan State University, Pennsylvania State University, Fordham University, University of Massachusetts at Amherst, Baruch College (co-author), Lehigh University (co-author), University of Illinois at Chicago (co-author), NYU Economics Alumni Conference

2012: American Finance Association, Financial Intermediation Research Society, Western Economic Association, Binghamton (co-author)

2011: Society for Financial Studies Cavalcade, Indian School of Business Summer Conference on Finance (co-author), 9th Infiniti Conference on International Finance, University of Rochester, University of Melbourne (co-author)

2010: American Finance Association (co-author), 23rd Australasian Banking and Finance Conference (co-author), Asian Financial Management Association (co-author), New York Accounting and Finance Forum, University of Queensland (co-author)

2009: American Finance Association, Conference on Financial Economics and Accounting (co-author), Financial Management Association, European Financial Management Symposium on Corporate Governance and Control, 7th Infiniti Conference on International Finance, University of Michigan (co-author), Dartmouth College (co-author), University of Alabama (co-author)

2008: European Finance Association, European Financial Management Association, 6th Infiniti Conference on International Finance, Financial Management Association, University of Rochester (co-author), NYU Salomon Center Corporate Governance Luncheon

2007: American Economic Association, Financial Management Association, Annual Global Issues in Accounting Conference, University of Rochester, Arizona State, Ohio State, Emory University, UNC Chapel Hill, University of Georgia, University of Maryland, University of Michigan, NYU Salomon Center Corporate Governance Luncheon, Baruch College, Georgia Tech, University of Wisconsin


SELECTED PROFESSIONAL SERVICE


CONFERENCES

2018: European Finance Association (program committee), European Financial Management Association (program committee), Financial Management Association (program committee, session chair, discussant - scheduled), Midwest Finance Association (discussant), Baltimore Area Finance Conference (discussant), 2nd Emerging Trends in Entrepreneurial Finance Conference (discussant), P2P Financial Systems International Workshop (discussant), Conference on Investor Protection, Corporate Governance, and Fraud Prevention (discussant)

2017: European Finance Association (program committee), European Financial Management Association (program committee), Financial Management Association (program committee, discussant, session chair), Conference on Financial Market Regulation (program committee), Midwest Finance Association (program committee), Eastern Finance Association (program committee), Southwestern Finance Association (program committee), Conference on Financial Economics and Accounting (discussant)

2016: European Finance Association (program committee), European Financial Management Association (program committee), Financial Management Association (program committee, discussant, session chair), World Finance Conference (program committee), Infiniti Conference on International Finance (program committee), Conference on Financial Market Regulation (program committee, corporate finance track co-chair)

2015: American Finance Association (discussant), Financial Management Association (program committee, session organizer, discussant, session chair), Infiniti Conference on International Finance (program committee), European Finance Association (program committee), European Financial Management Association (program committee), Conference on Financial Market Regulation (program committee)

2014: Financial Management Association (program committee, session organizer), European Finance Association (program committee), European Financial Management Association (program committee)

2013: American Finance Association (discussant), European Finance Association (program committee), European Financial Management Association (discussant, session chair, program committee), Financial Management Association (program committee, session organizer, discussant)

2012: European Financial Management Association (program committee), Financial Management Association (program committee, session organizer), Western Economic Association (discussant)

2011: Financial Management Association (discussant, session chair, program committee, session organizer, co-organizer and moderator of Assistant Professor Breakfast), European Financial Management Association (program committee), Infiniti Conference on International Finance (discussant, session chair)

2010: American Finance Association (discussant), Financial Management Association (discussant, session chair, program committee, session organizer)

2009: European Financial Management Symposium on Corporate Governance and Control (discussant, program committee), Financial Management Association (discussant, session chair, program committee, session organizer), Infiniti Conference on International Finance (discussant, program committee)

2008: American Finance Association (discussant), European Finance Association (discussant), European Financial Management Association (discussant, session chair), Infiniti Conference on International Finance (discussant, session chair, program committee), Financial Management Association (discussant, session chair, program committee, session organizer)

2007: Annual Conference on Financial Economics and Accounting (discussant), Financial Management Association (discussant, session chair, program committee, session organizer)


JOURNALS

Associate editor: Journal of Financial Research (2018-present)

Ad hoc referee: Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Financial Management, Financial Review, Journal of Banking and Finance, Journal of Corporate Finance, Journal of Financial and Quantitative Analysis, Journal of Financial Research, Journal of International Business Studies, Management Science, Review of Finance


HONORS

SEC Gift Card Recognition Program award for economic analysis in rulemaking, 2018
SEC DERA Director’s Award, 2017
SEC Law and Policy Honorary Award, 2016
SEC Special Act awards for economic analysis in rulemaking (2015 (2), 2016 (2)) and economic research (2015 (2))
Superior Teaching Award, MS Class of 2013, Simon School of Business, University of Rochester
Teaching Honor Roll, Spring 2013, Simon School of Business, University of Rochester
Superior Teaching Award, MS Class of 2012, Simon School of Business, University of Rochester
Teaching Honor Roll, Spring 2011, Simon School of Business, University of Rochester