Research
Working Papers
Unveiling the Nexus: Tracing the Footprints of Lobbyists in Mutual Fund Voting
Presented at Northern Finance Association (NFA) PhD Poster Session, Sept. 2023, Financial Management Association (FMA) Doctoral Student Consortium, Oct. 2023 (Scheduled), 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 the Canadian Sustainable Finance Network (CSFN) conference in 2022, the 3rd CEFGroup Finance Symposium in New Zealand, and York University.
Abstract: This study investigates the effectiveness of EPA enforcement in reducing pollution emissions. Analyzing detailed power plant-level data from the US electricity sector suggests that EPA-targeted plants owned by multi-establishment parent companies exhibit reductions in pollution emissions and electricity generation after enforcement actions. The measures taken to reduce emissions include decreasing coal-burning electricity generation, enhancing efficiency, and increasing the number of scrubbers. These measures are facilitated by economies of scale in fuel procurement and enhanced access to finance. Moreover, the beneficial impact of EPA enforcement extends across the intra-firm network of establishments, resulting in better environmental performance not only in the targeted plants but also in the non-targeted ones. However, the corporate responses to EPA enforcement actions result in a surge in fuel costs. This burden is ultimately transferred to the consumers through higher electricity prices.
(with Arshia Farzamfar, Pouyan Foroughi, and Lilian Ng)
Revise and Resubmit at Journal of Corporate Finance
Abstract: Analyzing the intricate financial dimensions of multi-segment conglomerates necessitates a more nuanced approach than that required for single-segment firms. We find that conglomerates compensate for their business complexity by strategically disclosing more information voluntarily. This finding becomes more pronounced under heightened information demands from stakeholders and analysts or when the pay-performance sensitivity is higher. The enhanced transparency, while seemingly a response to their multifaceted financial reporting, actually serves as a strategic move, yielding tangible benefits in the form of improved firm valuation and decreased capital costs. Overall, our study illustrates that multi-segment firms tactically deploy voluntary disclosure to offset the potential detriments of their business complexity.