Jenny (Ji Hyun) Tak

Global Insolvency and Cross-border Capital Flows (with Yeejin Jang and Wei Wang)

Presentations: University of New South Wales 2022, Annual Conference of the Asia-Pacific Association of Derivatives (Busan) 2023, FIRN Corporate Finance Meeting 2023*, Annual Conference on Asia-Pacific Financial Markets (Seoul) 2023*, Sydney Banking and Financial Stability Conference 2023, Australasian Finance & Banking Conference 2023, Midwest Finance Association Annual Meeting (Chicago) 2024*, Hanyang University (scheduled), China International Conference in Finance (Beijing) 2024 (scheduled), Monash Winter Finance Conference 2024 (scheduled)*, 

Abstract: Poor court coordination across bankruptcy jurisdictions creates uncertainty in the protection of debtors' value and creditor recoveries. In this paper, we assess how such global judicial inefficiency impedes cross-border capital flows. Exploiting the introduction of Chapter 15 to the U.S. Bankruptcy Code in 2005, which facilitates coordination between the U.S. and foreign courts for multinational bankruptcy proceedings, we find that foreign firms in countries with greater utilization of Chapter 15 acquired 35% more U.S. targets after the law enactment. Consistent with the reduction in global insolvency costs, the effect is more pronounced for firms with higher default risks. Chapter 15 adoption also results in greater debt capacity of foreign firms, especially from U.S. lenders, and trade credit. Using the staggered adoptions of global bankruptcy laws in 17 countries, we find an increase in cross-border M&As following the adoptions. Overall, our results suggest that mitigating frictions arising from global insolvency proceedings can be an important driver for cross-border capital flows and the growth of multinational firms.

Operational Proximity and Cross-border Shareholder Monitoring (with Fariborz Moshirian and Peter Pham) Under Review

• Best Paper in Corporate Finance, Semi-finalist, 2023 FMA Annual Meeting

Presentations: FIRN Annual Conference 2022, FMA Asia-Pacific Conference (Melbourne) 2022, Australasian Finance & Banking Conference 2022, Vietnam International Conference in Finance 2023*, University of New South Wales PhD Workshop 2023, Monash Winter Finance Conference 2023, FMA Annual Meeting (Chicago) 2023, FMA Special PhD Paper Presentations 2023, FMA Asia-Pacific Conference (Seoul) 2024 (scheduled)

Abstract: We investigate whether proximity to firms' operations promotes active monitoring by foreign investors, as captured by voting activities of US mutual funds. To disentangle monitoring from selection effects, we exploit the timing of US expansions by funds' existing non-US portfolio firms. Funds cast more dissenting votes in firms' meetings after their US expansions, particularly in response to poor performance and for closely contested proposals. The post-expansion increase in dissent voting appears to be driven by improved information flows, which alleviate weaknesses in local governance environments. Our findings suggest that cross-border economic activities facilitate the global dissemination of best-practice shareholder activism.

Risk Sharing in Supply Chains of Business Groups: Evidence from Trade Credit (with Jinzhao Du, Ron Masulis and Peter Pham)

• Best Paper in PhD Presentations, Sydney Banking and Financial Stability Conference 2023

Presentations: Annual Conference on Asia-Pacific Financial Markets (Seoul) 2023*, Sydney Banking and Financial Stability Conference 2023*, Australasian Finance & Banking Conference 2023*, FMA Asia-Pacific Conference (Seoul) 2024 (scheduled), Annual Conference of the Asia-Pacific Association of Derivatives (Busan) (scheduled)*

Abstract: We examine customer-supplier relationships and trade financing within a business group. Our analysis reveals that business group firms actively trade among themselves and utilize trade financing to assist their affiliates in mitigating operating risks. Compared to stand-alone peers, group firms trading with suppliers from the same group receive greater trade credit, especially when facing difficult sales conditions and cash shortages. Trade financing is a substitute for direct investment as a way to allocate internal capital within a group, except for the most capital-dependent (bottom-of-pyramid) affiliates, where both channels matter. An identification strategy based on major natural disasters strengthens the causal interpretation of our main results. 

Regulatory-Induced Alignment of CEO Compensation with Long-Term Firm Value Creation (solo-authored)

Presentations: Illinois International Accounting Symposium and Nanyang Business School Accounting Conference PhD Consortium 2024

Abstract: Can regulation incentivize shareholders to engage in long-term objectives? This study examines the impact of the Shareholder Rights Directive II, passed by the European Union (EU) in 2017, which introduced mandatory binding Say-on-Pay votes on executives' compensation in listed EU firms. Following the passage of the directive, firms are more likely to voluntarily implement long-term incentive performance metrics by 21% and disclose corresponding performance targets by 17%. Moreover, after the reform, firms, especially those with excess pay in the pre-passage period, aligned CEO pay with long-term firm performance. Consequently, shareholders' long-term orientation promotes long-term real investments and higher ESG ratings in their investee firms. My findings suggest that regulatory interventions promoting long-term shareholder engagement can significantly drive long-term value creation.