Research

Research Interests

Corporate Finance, Corporate Governance, Executive Compensation, Corporate Social Responsibility, Ownership Structure.

Publications

Ownership Concentration and Firm Risk: The Moderating Role of Mid-Sized Blockholders (with Silvia Rossetto and Raffaele Staglianò). Journal of Business Finance & Accounting, 2022, 1–34. DOI: 10.1111/jbfa.12634

This study analyzes the relationship between mid-sized blockholders and firm risk. We show that ownership structure matters for firm risk, beyond the first largest blockholder. Firms with multiple blockholders take more risk than firms with just one blockholder, even when controlling for the stake of the largest blockholder. Consistent with the diversification argument, we find that firm risk increases by 22% when the number of blockholders increases from one to two. Our results are robust to controlling for blockholder type and firm characteristics. We carry out various robustness checks to tackle endogeneity issues. More generally, we provide evidence that firms' decisions are affected by mid-sized blockholders, and not merely the largest blockholder. This is in line with theoretical predictions.

Working papers

CEO Stock Option Exercises and Earnings Announcements (with Alexander Guembel).

Stock options are supposed to align CEO interests with those of shareholders. However, CEOs may behave opportunistically when their incentives become very sensitive i.e. when they have options that are about to expire. We investigate whether CEO exercise decisions affect the contents and timing of annual earnings announcements. We show that earnings are more likely to exceed analyst forecasts when CEOs exercise close-to-expiry stock options shortly after the announcements. The likelihood of positive earnings surprise is higher when option exercises are followed by stock sales. We then examine the timing of earnings announcements. The results show that companies accelerate earnings announcements when CEOs exercise stock options shortly after those announcements, especially when the obtained shares are sold. Finally, we investigate the relationship between the incentives given by stock option exercises made close to expiry and the level of accruals. We find a higher level of discretionary accruals when CEOs have to exercise options that are about to expire. The results of the paper are consistent with earnings manipulation when CEOs exercise close-to-expiry stock options shortly after earnings announcements.

Director Expertise and Compliance to Corporate Social Responsibility Regulations (with Wentao Li and Swarnodeep Homroy).

We study how corporate governance affects corporate social responsibility (CSR) using the 2013 CSR regulation in India that mandates qualifying companies to spend 2 percent of the profits on CSR. Controlling for the endogenous association of corporate governance and CSR choices, we demonstrate that the formation of CSR committees and appointment of directors with relevant experience (CSR-Directors) increases the compliance to the CSR law percent. Further, we show that CSR-Directors affect compliance by reducing the cost of compliance. This effect is larger for companies in more competitive industries, companies with higher debt, and companies with no previous history of CSR. Companies with higher CSR compliance gain in value and have increased creditworthiness.

An American in Paris: National Director's Foreign Experience and Firm Internationalization (with Shibashish Mukherjee and Niels Hermes).

Despite considerable research on corporate boards, there is a lack of consensus on how directors’ prior work experience affects the firms’ corporate strategy. Using data from 3,068 US-listed firms between 2003 and 2015, we study how US directors’ foreign board experience affects the degree of internationalization of the firm on which board they sit. We show that US directors’ foreign board experience in countries with familiar legal institutions (i.e., common law countries) does not affect the degree of internationalization of the firm. Instead, US directors with board experience in countries with unfamiliar legal institutions (i.e., code law countries) are associated negatively with the firm’s degree of internationalization. This suggests that these directors provide negative advice regarding the firm’s internationalization strategy. We further show that higher levels of societal trust and prior executive experience in code law countries reduces the negative association between US directors’ foreign experience and the degree of internationalization of the firm on which board they sit, suggesting that under these two circumstances, the impact of their foreign experience on the internationalization of the firm is less negative. We explain this latter outcome by pointing at the institutional learning of these directors.

CEO Stock Option Exercises and Private Information.

I study CEO stock option exercise behavior and use of private information. Using hand-collected data in French companies, I show that most CEOs exercise options during the last year since they stay longer in the company, on average, 6.8 years as CEOs and 18.3 years in the firm. This late exercise makes CEOs lose 55 % of the gain they could have obtained. The results suggest that CEOs with time flexibility use private information when exercising options and time exercises to occur on the most favorable day. The results show that close-to-expiry option exercises are not driven by private information.