VGSF - WU Vienna - LC

Sanjai Bhagat, University of Colorado

Campus WU D4.0.019 10:00 - 11:00

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.

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June 19th, 2019, 12:00-13:30, D4.0.144

San­jai Bhagat, Uni­versity of Col­or­ado

Title: "Cor­por­ate Gov­ernance and Firm Per­form­ance: The Sequel"

Ab­stract

Dir­ector stock own­er­ship is most con­sist­ently and pos­it­ively re­lated to fu­ture cor­por­ate per­form­ance. Pub­lic poli­cy­makers and long-term in­vestors should find this res­ult espe­cially rel­ev­ant given their strong in­terest in long-term cor­por­ate per­form­ance. Equally im­port­ant, cor­por­ate gov­ernance re­search­ers should con­sider dir­ector stock own­er­ship as a meas­ure of cor­por­ate gov­ernance; this will also aid in the com­par­ab­il­ity of res­ults across dif­fer­ent stud­ies.

In our 2008 pa­per, Cor­por­ate gov­ernance and firm per­form­ance, we con­sidered data through 2002. In this pa­per, we ex­tend our sample period through 2016. These ad­di­tional 14 years of data provide a power­ful out-of-sample test of the spe­cific­a­tion and power of dir­ector stock own­er­ship as a meas­ure of cor­por­ate gov­ernance. Fur­ther, ex­tend­ing the period al­lows us to cap­ture the dy­nam­ics of the fin­an­cial crisis, the Great Re­ces­sion, Sar­banes-Ox­ley (2002), and Dod­d-­Frank (2010). We find dir­ector stock own­er­ship most con­sist­ently and pos­it­ively re­lated to fu­ture cor­por­ate per­form­ance in this out-of-sample period (2003-2016) across a bat­tery of dif­fer­ent spe­cific­a­tions, es­tim­a­tion tech­niques, and for dif­fer­ent sub­-samples. One par­tic­u­lar sub­-sample of con­sid­er­able pub­lic in­terest is the 100 largest U.S. fin­an­cial in­sti­tu­tions around 2008. Bank dir­ector stock own­er­ship is pos­it­ively re­lated to fu­ture bank per­form­ance, and bank dir­ector stock own­er­ship is neg­at­ively re­lated to fu­ture bank risk, both prior to and dur­ing the fin­an­cial crisis – both res­ults of con­sid­er­able in­terest to senior bank reg­u­lat­ors.



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