My research interests are in empirical corporate finance and international finance with emphasis on corporate governance, ownership structure, and taxes.
Working Papers
Abstract: I exploit a quasi-natural experiment provided by a tax reform in Korea to examine the effect of corporate tax avoidance on firm value, and the interaction between the corporate tax system and corporate governance. First, I find that investors perceive tax avoidance to be, on average, a value enhancing activity. Second, the market response to the tax reform is consistent both with the notion that higher tax rates can worsen corporate governance outcomes by increasing the return from income diversion, and that stricter tax enforcement can actually increase firm value. The results are robust to alternative specifications and explanations.
✔ Presented at 2017 FMA European Conference, 2017 FMA Annual Meeting.
✔ Columbia Law School’s Blue Sky Blog
The Real Effects of Bankruptcy on Competitor Firms
Abstract: I examine the effects of corporate bankruptcy announcements on the firm valuation and the corporate policies of non-bankrupt competitor firms. I find that competitor firms experience, on average, an increase in stock price around Chapter 11 bankruptcy announcements. This result is contrary to prior studies that find negative spillover effects for industry competitors. Further tests show that these results are mostly driven by firms with higher institutional ownership, by bankruptcies in more recent years, and by bankruptcies occurring during economic downturns rather than due to the proxy chosen for competition, firm and industry level leverage, measures of financial constraints, or industry concentration. Furthermore, I extend the analysis to examine whether managers of non-bankrupt competitors make ex post real changes to corporate investment and innovation compared to a propensity score matched control sample. I find that competitor firms cut investment, increase investment efficiency, increase R&D, and conduct more-novel research. Taken altogether, the results are consistent with improvements in investment decisions and innovative productivity in the period following bankruptcy announcements, and provide evidence in favor of a governance effect as opposed to a contagion or competitive effect.
Work in Progress
Investor Activism and Corporate Spinoffs, with John J. McConnell and Yeejin Jang
Do Corporate Policies Respond to Tax Incentives? Evidence from a Quasi-Natural Experiment
Institutional Investors, Pro-Market Polity Orientation, and the Cross-Country Variation in Corporate Payout Policy, with Jinhee Kim