Shareholder Governance and CEO Compensation: The Peer Effects of Say on Pay (with D. K. Denis and T. Jochem), 2019, The Review of Financial Studies, Forthcoming. (Link)
Abstract: We document that firms whose compensation peers experience weak say on pay votes reduce CEO compensation following those votes. Reductions reflect proxy adviser concerns about peers' compensation contracts and are stronger when CEOs receive excess compensation, when they compete more closely with their weak-vote peers in the executive labor market, and when those peers perform well. Reductions occur following peers' disclosures of revised pay and are proportional to those needed to retain firms' relative positions in their peer groups. We conclude that the spillover effects of shareholder voting occur through both learning and compensation targeting channels.
Featured in Harvard Law School Forum on Corporate Governance and Financial Regulation, Aug 2019. (Link)
The International Diversification of Banks and the Value of Their Cross-Border M&A Advice (with M. van der Poel, A. de Jong and S. Ongena), 2017, Management Science, 63, 2211-2232. (Link)
Abstract: We examine the impact of the international diversification of banks on the value of their advice in 1,705 cross-border merger and acquisition (M&A) transactions. We find that bidders engaging internationally diversified advisors face lower announcement returns. An increase of one standard deviation in advisor diversification is associated with an announcement return lower by 92 basis points for a bidder acquiring a listed target. The lower bidder returns are attributable to the lower synergies of the deals being completed. Our evidence suggests that internationally diversified advisors offer lower-quality advice to their clients, since their reputational concerns are weakened by having access to multiple geographies from which they can derive fee-based inco/me. We present further evidence that financial incentives in the form of the advisor’s involvement in deal financing and market incentives in the form of the potential to gain market share in the bidder country may mitigate some of the negative effects of the international diversification of the advisors.
Featured in International Banker, Winter, pp. 16-19. (Link)