Research
Research
(with Arshia Farzamfar, Pouyan Foroughi, and Lilian Ng)
Journal of Corporate Finance, Volume 87, Aug 2024
Abstract: Analyzing the complex financial landscape of multi-segment conglomerates requires a more nuanced approach than that required for single-segment firms. This paper reveals that conglomerates strategically enhance their transparency by voluntarily disclosing more information to compensate for their business complexity. This finding is particularly pronounced when there is an increased demand for information from stakeholders and analysts or when the executive pay-performance sensitivity is higher. By strategically embracing transparency, conglomerates transform the complexities inherent in their financial reporting into a catalyst for higher valuation and lower capital costs. Overall, our study demonstrates that multi-segment firms tactically deploy voluntary disclosure to navigate their intricate business environment effectively.
Presented at Northern Finance Association (NFA) PhD Poster Session, Sept. 2023, Financial Management Association (FMA) Doctoral Student Consortium, Oct. 2023, and York University.
Abstract: This paper investigates whether mutual funds exhibit a preference for portfolio companies with which they have shared lobbyists and assesses how this preference impacts their voting behavior. We uncover that institutional shareholders, when aligned with their portfolio companies through a shared lobbying firm, exhibit a higher propensity to vote in concurrence with company management—especially when such votes carry significant managerial value. Following these voting events, we observe negative abnormal returns and a more pronounced impact in firms with entrenched leadership. Overall, our findings indicate that management might strategically leverage shared lobbying relationships to influence shareholder voting patterns.
(with Pouyan Foroughi and Lilian Ng)
Presented at Financial Management Association (FMA) 2024, Midwest Finance Association Meetings 2024, Canadian Sustainable Finance Network (CSFN) conference in 2022, the 3rd CEFGroup Finance Symposium in New Zealand in 2023, and York University.
Abstract: This study tackles a critical issue in business ethics: how firms respond after their plants violate environmental regulations. Our stacked difference-in-differences (DiD) analysis shows that non-compliant plants significantly reduce air pollution and electricity output while implementing long-term strategies to prevent future violations. These changes are driven by the utility firms' organizational structure, which fosters economies of scale, supported by government subsidies and environmental enforcement efforts. We observe significant post-violation increases in total assets, capital expenditures, long-term debt, revenues, expenses, and electricity prices. Despite these rising costs and revenues, operating income remains steady. While these measures are crucial for mitigating environmental harm, the shifting of compliance costs to communities raises serious concerns about social welfare. We highlight market competition and government subsidies as two factors that can mitigate shifting the compliance costs to consumers.