16th Annual Corporate Governance Academic Conference at Drexel University

Drexel University - ECGI

16th Annual Corporate Governance Academic Conference at Drexel University

  • 14 April 2023
  • Drexel University LeBow College of Business, Philadelphia, U.S.A

16th Annual Corporate Governance Academic Conference

Drexel University - ECGI

Friday, 14 April 2023

08:30 - 17:00 EDT | 14:30 - 23:00 CEST

Location:

Drexel University LeBow College of Business

Registration Fees:

Conference & Thursday Evening Dinner: $275.00 | Conference Only: $200.00

 

ABOUT THE EVENT

The Raj & Kamla Gupta Governance Institute invites you to join us for our 16th Annual Corporate Governance Conference.  Academics and Practitioners were invited to submit papers by December 21, 2022, to this annual, invitation-only conference in any area related to corporate governance, which includes (but is not restricted to) topics such as boards of directors, compensation, shareholder activism, mergers, debt as a form of governance, ESG-related issues, political influences on governance, etc.

The conference is being hosted by the Raj & Kamla Governance Institute at Drexel University in collaboration with the European Corporate Governance Institute (ECGI). The conference highlights the profound research by top professors around the world on issues related to corporate governance and the boardroom.

Location:

The conference will take place on Friday, April 14 2023, with a pre-conference dinner to be held on Thursday, April 13 2023, at the La Viola Restaurant, Philadelphia. (253 S 16th St, Philadelphia, PA 19102, US)

The conference on the 14 April will take place at Drexel University LeBow College of Business, Gerri C. LeBow Hall, 722 (7th floor), 3220 Market Street, Philadelphia, PA 19104

If you need assistance, please get in touch with Mirela Hima, assistant director, Raj & Kamla Gupta Governance Institute at mh3229@drexel.edu.

Registration

Fees: Conference & Thursday Evening Dinner: $275.00 | Conference Only: $200.00

Register herehttps://www.lebow.drexel.edu/event/2023/04/13/gupta-governance-institute...

Corporate Governance Center Fellows, who serve as the program committee, are:

  • Renee Adams
  • Jeffrey Coles
  • Diane Del Guercio
  • David Denis
  • Laura Field
  • Nick Gantchev
  • Todd Gormley
  • Tom Griffin
  • Jarrad Harford
  • Peter Iliev
  • Wei Jiang
  • Dalida Kadyrzhanova
  • Jonathan Karpoff
  • Nadya Malenko
  • Kevin Murphy
  • Lalitha Naveen
  • Micah Officer
  • Gordon Phillips
  • Anil Shivdasani
  • Anh Tran
  • Michael S. Weisbach
  • Jared Wilson
  • Tracie Woidtke
  • Yuhai Xuan
  • Ke Yang
  • David L. Yermack

Information

Address:
LeBow College of Business, 3220 Market St, Philadelphia PA, 19104
Contact:
Mirela Hima
LeBow College of Business

Thursday,13 April 2023 | 18:00 EDT

18:00

Welcome Dinner | La Viola Restaurant

Friday, 14 April 2023 | 08:30 EDT (14:30 CEST)

08:30

Registration & Breakfast

SESSION I: Environmental and Social Considerations | Chaired by

Speakers:
Back to full programme

Decarbonizing Institutional Investor Portfolios

Time:
09:00h

Decarbonizing Institutional Investor Portfolios

Authors:

Vaska Atta-Darkua

University of Virginia, Darden School of Business

Simon Glossner

Board of Governors of the Federal Reserve System

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; European Corporate Governance Institute (ECGI); University of Geneva - Geneva School of Economics and Management

Pedro Matos

University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI)

 

Abstract

Combining global data on institutional investors’ equity holdings and firm-level carbon emissions, we study how climate-conscious institutions reduced the carbon emissions of their equity portfolios between 2005 and 2019. We hypothesize that institutions could either decarbonize via tilting their holdings towards lower emitting firms or via engaging their portfolio firms to curb emissions. Our analysis suggests that tilting is the predominant strategy used by climate-conscious institutions but also uncover some early evidence of longer-term engagement with the top emitting firms following the 2015 Paris Agreement. We also find limited evidence of other portfolio measures of energy transition in terms of green patents and firm revenues. Overall, our analysis raises some doubts about the effectiveness of investor-led initiatives in reducing corporate carbon emissions and taking necessary action on climate change.

Speakers

Discussants

Conference Documents

09:45

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Speakers:
Discussant:
Back to full programme

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Time:
09:45h

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Authors:

Ran Duchin

Boston College - Carroll School of Management

Janet Gao

McDonough School of Business

Qiping Xu

University of Illinois Urbana Champaign

 

Abstract

This paper provides novel evidence on the role of pollution in the divestitures of industrial plants. We find that firms divest pollutive plants following scrutinized environmental risk incidents. Following these divestitures, however, total pollution levels at the sold plants do not decline, and per-employee pollution levels increase. Furthermore, the sellers do not fully lose access to these plants, since they are sold to firms with supply chain relationships or joint ventures with the sellers. The sellers, however, earn higher environmental, social, and governance (ESG) ratings, reduce their regulatory compliance costs, and improve their access to government resources. Overall, the evidence suggests that the asset market allows firms to redraw their boundaries in a manner perceived as environmentally friendly without real consequences for pollution levels or production processes.

Speakers

Discussants

Conference Documents

Back to full programme

Diversity Washing

Time:
10:30h

Diversity Washing

Authors:

Andrew Baker

Berkeley Law School

David F. Larcker

Stanford University - Graduate School of Business; European Corporate Governance Institute (ECGI); Stanford University - Hoover Institution

Charles McClure

University of Chicago Booth School of Business

Durgesh Saraph

Jump Trading

Edward M. Watts

Yale School of Management

Abstract

We provide large-sample evidence on whether U.S. publicly traded corporations opportunistically use voluntary disclosures about their commitments to employee diversity. We document significant discrepancies between companies' disclosed commitments and their hiring practices and classify firms that discuss diversity more than their actual employee gender and racial diversity warrants as “diversity washers." We find diversity-washing firms obtain superior scores from environmental, social, and governance (ESG) rating organizations and attract investment from institutional investors with an ESG focus. These outcomes occur even though diversity-washing firms are more likely to incur discrimination violations and pay larger fines for these actions. Our study highlights the consequences of selective ESG disclosures on an important social dimension of employee diversity, equity, and inclusion.

Speakers

Discussants

Conference Documents

11:15

Coffee Break

11:40

SESSION II: Governance in Action | Chaired by

Speakers:
Back to full programme

Voting Rationales

Time:
12:23h

Speakers

Back to full programme

CEO Social Preferences and Layoffs

Time:
12:23h

Speakers

Back to full programme

Do Individual Directors Matter?

Time:
12:23h

Do Individual Directors Matter? Evidence of Director-Specific Quality

Authors:

Dipesh Bhattarai

University of Tennessee, Knoxville - Department of Finance

Matthew Serfling

University of Tennessee; European Corporate Governance Institute (ECGI)

Tracie Woidtke

University of Tennessee, Haslam College of Business

 

Abstract

We create a new measure called director-specific quality (DSQ) that captures the collection of value-relevant transferable attributes unique to a director and explains 10% of the variation in firm value. Directors with higher DSQ receive greater voter support, and investors respond more (less) favorably when they are appointed (die). Boards with higher DSQ make more value-increasing M&A deals, tie CEO compensation more closely to performance, produce more and higher quality innovation, and manage cash better. Difference-in-differences analyses exploiting director deaths confirm these effects. During the COVID-19 pandemic, firms with higher board-level DSQ also experienced relatively higher stock returns. Overall, our results suggest that directors have unique value-relevant attributes, and who firms hire matters.

Speakers

Conference Documents

13:00

Lunch Break

Management (of) Proposals

Speakers:
Ilona Babenko
Back to full programme

Motivating Collusion

Time:
12:23h

Motivating Collusion

Authors

Sangeun Ha

Copenhagen Business School - Department of Finance

Fangyuan Ma

Chinese University of Hong Kong (CUHK) - Department of Finance; Peking Univeristy, HSBC Business School

Alminas Zaldokas

Hong Kong University of Science & Technology (HKUST) - Department of Finance

 

Abstract

We examine how executive compensation can be designed to motivate product market collusion. We look at the 2013 decision to close several regional offices of the Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue that this made collusion more appealing to the shareholders, and find that these firms increased the sensitivity of executive pay to local rivals' performance, consistent with rewarding the managers for colluding with them. The affected CEOs were also granted more equity compensation, which provides long-term incentives that could foster collusive arrangements.

Speakers

Conference Documents

Back to full programme

Voice Through Divestment

Time:
12:23h

Speakers

Fellow Research Member Institutional Member Board Member

SESSION III: Beyond Corporate Governance | Chaire by

Speakers:
14:00

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Speakers:
Discussant:
Back to full programme

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Time:
14:00h

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Authors

Paul H. Décaire

Arizona State University (ASU) - Finance Department

Denis Sosyura

Arizona State University

 

Abstract

Using micro data on managerial expenditures, we uncover heuristics in capital budgets, such as nominal rigidity, anchoring, and sharp reset deadlines. Such heuristics engender managerial opportunism and erode investment efficiency. Managers with a budget surplus increase investment sharply before budget deadlines, and such investments yield lower sales, weaker margins, and more negative NPV projects. Managers who reach a budget constraint early in the fiscal cycle halt further spending until their budget is reset, irrespective of investment options. These effects are stronger at firms with more hierarchical layers and a greater subordinates-to-executives ratio. Overall, simplifying budgeting rules engender strategic behavior and wasteful spending.

Speakers

Discussants

Conference Documents

Back to full programme

Control Without Ownership: Governance of Nonprofit Hospitals

Time:
14:45h

Speakers

Discussants

Back to full programme

Closing the Revolving Door

Time:
15:30h

Closing the Revolving Door

Authors

Joseph Kalmenovitz

University of Rochester - Simon Business School

Siddharth Vij

University of Georgia Terry College of Business

Kairong Xiao

Columbia University

 

Abstract

Regulators can leave their government position for a job in a regulated firm. Using granular payroll data on 23 million federal employees, we uncover the first causal evidence of revolving door incentives. We exploit the fact that post-employment restrictions on federal employees, which reduce the value of their outside option, trigger when the employee's base salary exceeds a threshold. We document significant bunching of employees just below the threshold, consistent with a deliberate effort to preserve the value of their outside option. The effect is concentrated among agencies with broad regulatory powers, minimal supervision by elected officials, and frequent interactions with high-paying industries. In those agencies, 32% of the regulators respond to revolving door incentives and sacrifice 5% of their wage potential to stay below the threshold. Consistent with theories of regulatory capture, we find that revolving regulators issue fewer rules and rules with lower costs of compliance. Using our findings to calibrate a structural model, we show that doubling the duration of the restriction will reduce the incentive distortion in the federal government by 2.7%, at the cost of modest decline in labor supply to the public sector. Combined, our results shed new light on the economic implications of the revolving door in the government.

Speakers

Discussants

Conference Documents

16:15

Drinks

Speakers

Presentations

Back to all presentations

SESSION I: Environmental and Social Considerations | Chaired by

Time:
12:23h

Speakers

Back to all presentations

Decarbonizing Institutional Investor Portfolios

Time:
09:00h

Decarbonizing Institutional Investor Portfolios

Authors:

Vaska Atta-Darkua

University of Virginia, Darden School of Business

Simon Glossner

Board of Governors of the Federal Reserve System

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; European Corporate Governance Institute (ECGI); University of Geneva - Geneva School of Economics and Management

Pedro Matos

University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI)

 

Abstract

Combining global data on institutional investors’ equity holdings and firm-level carbon emissions, we study how climate-conscious institutions reduced the carbon emissions of their equity portfolios between 2005 and 2019. We hypothesize that institutions could either decarbonize via tilting their holdings towards lower emitting firms or via engaging their portfolio firms to curb emissions. Our analysis suggests that tilting is the predominant strategy used by climate-conscious institutions but also uncover some early evidence of longer-term engagement with the top emitting firms following the 2015 Paris Agreement. We also find limited evidence of other portfolio measures of energy transition in terms of green patents and firm revenues. Overall, our analysis raises some doubts about the effectiveness of investor-led initiatives in reducing corporate carbon emissions and taking necessary action on climate change.

Speakers

Discussants

Conference Documents

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Back to all presentations

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Time:
09:45h

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

Authors:

Ran Duchin

Boston College - Carroll School of Management

Janet Gao

McDonough School of Business

Qiping Xu

University of Illinois Urbana Champaign

 

Abstract

This paper provides novel evidence on the role of pollution in the divestitures of industrial plants. We find that firms divest pollutive plants following scrutinized environmental risk incidents. Following these divestitures, however, total pollution levels at the sold plants do not decline, and per-employee pollution levels increase. Furthermore, the sellers do not fully lose access to these plants, since they are sold to firms with supply chain relationships or joint ventures with the sellers. The sellers, however, earn higher environmental, social, and governance (ESG) ratings, reduce their regulatory compliance costs, and improve their access to government resources. Overall, the evidence suggests that the asset market allows firms to redraw their boundaries in a manner perceived as environmentally friendly without real consequences for pollution levels or production processes.

Speakers

Discussants

Conference Documents

Back to all presentations

Diversity Washing

Time:
10:30h

Diversity Washing

Authors:

Andrew Baker

Berkeley Law School

David F. Larcker

Stanford University - Graduate School of Business; European Corporate Governance Institute (ECGI); Stanford University - Hoover Institution

Charles McClure

University of Chicago Booth School of Business

Durgesh Saraph

Jump Trading

Edward M. Watts

Yale School of Management

Abstract

We provide large-sample evidence on whether U.S. publicly traded corporations opportunistically use voluntary disclosures about their commitments to employee diversity. We document significant discrepancies between companies' disclosed commitments and their hiring practices and classify firms that discuss diversity more than their actual employee gender and racial diversity warrants as “diversity washers." We find diversity-washing firms obtain superior scores from environmental, social, and governance (ESG) rating organizations and attract investment from institutional investors with an ESG focus. These outcomes occur even though diversity-washing firms are more likely to incur discrimination violations and pay larger fines for these actions. Our study highlights the consequences of selective ESG disclosures on an important social dimension of employee diversity, equity, and inclusion.

Speakers

Discussants

Conference Documents

SESSION II: Governance in Action | Chaired by

Back to all presentations

SESSION II: Governance in Action | Chaired by

Time:
11:40h

Speakers

Back to all presentations

Voting Rationales

Time:
12:23h

Speakers

Back to all presentations

CEO Social Preferences and Layoffs

Time:
12:23h

Speakers

Back to all presentations

Do Individual Directors Matter?

Time:
12:23h

Do Individual Directors Matter? Evidence of Director-Specific Quality

Authors:

Dipesh Bhattarai

University of Tennessee, Knoxville - Department of Finance

Matthew Serfling

University of Tennessee; European Corporate Governance Institute (ECGI)

Tracie Woidtke

University of Tennessee, Haslam College of Business

 

Abstract

We create a new measure called director-specific quality (DSQ) that captures the collection of value-relevant transferable attributes unique to a director and explains 10% of the variation in firm value. Directors with higher DSQ receive greater voter support, and investors respond more (less) favorably when they are appointed (die). Boards with higher DSQ make more value-increasing M&A deals, tie CEO compensation more closely to performance, produce more and higher quality innovation, and manage cash better. Difference-in-differences analyses exploiting director deaths confirm these effects. During the COVID-19 pandemic, firms with higher board-level DSQ also experienced relatively higher stock returns. Overall, our results suggest that directors have unique value-relevant attributes, and who firms hire matters.

Speakers

Conference Documents

Management (of) Proposals

Professor
Ilona Babenko
Back to all presentations

Motivating Collusion

Time:
12:23h

Motivating Collusion

Authors

Sangeun Ha

Copenhagen Business School - Department of Finance

Fangyuan Ma

Chinese University of Hong Kong (CUHK) - Department of Finance; Peking Univeristy, HSBC Business School

Alminas Zaldokas

Hong Kong University of Science & Technology (HKUST) - Department of Finance

 

Abstract

We examine how executive compensation can be designed to motivate product market collusion. We look at the 2013 decision to close several regional offices of the Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue that this made collusion more appealing to the shareholders, and find that these firms increased the sensitivity of executive pay to local rivals' performance, consistent with rewarding the managers for colluding with them. The affected CEOs were also granted more equity compensation, which provides long-term incentives that could foster collusive arrangements.

Speakers

Conference Documents

Back to all presentations

Voice Through Divestment

Time:
12:23h

Speakers

Fellow Research Member Institutional Member Board Member
Back to all presentations

SESSION III: Beyond Corporate Governance | Chaire by

Time:
12:23h

Speakers

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Back to all presentations

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Time:
14:00h

On a Spending Spree: The Real Effects of Heuristics in Managerial Budgets

Authors

Paul H. Décaire

Arizona State University (ASU) - Finance Department

Denis Sosyura

Arizona State University

 

Abstract

Using micro data on managerial expenditures, we uncover heuristics in capital budgets, such as nominal rigidity, anchoring, and sharp reset deadlines. Such heuristics engender managerial opportunism and erode investment efficiency. Managers with a budget surplus increase investment sharply before budget deadlines, and such investments yield lower sales, weaker margins, and more negative NPV projects. Managers who reach a budget constraint early in the fiscal cycle halt further spending until their budget is reset, irrespective of investment options. These effects are stronger at firms with more hierarchical layers and a greater subordinates-to-executives ratio. Overall, simplifying budgeting rules engender strategic behavior and wasteful spending.

Speakers

Discussants

Conference Documents

Back to all presentations

Control Without Ownership: Governance of Nonprofit Hospitals

Time:
14:45h

Speakers

Discussants

Back to all presentations

Closing the Revolving Door

Time:
15:30h

Closing the Revolving Door

Authors

Joseph Kalmenovitz

University of Rochester - Simon Business School

Siddharth Vij

University of Georgia Terry College of Business

Kairong Xiao

Columbia University

 

Abstract

Regulators can leave their government position for a job in a regulated firm. Using granular payroll data on 23 million federal employees, we uncover the first causal evidence of revolving door incentives. We exploit the fact that post-employment restrictions on federal employees, which reduce the value of their outside option, trigger when the employee's base salary exceeds a threshold. We document significant bunching of employees just below the threshold, consistent with a deliberate effort to preserve the value of their outside option. The effect is concentrated among agencies with broad regulatory powers, minimal supervision by elected officials, and frequent interactions with high-paying industries. In those agencies, 32% of the regulators respond to revolving door incentives and sacrifice 5% of their wage potential to stay below the threshold. Consistent with theories of regulatory capture, we find that revolving regulators issue fewer rules and rules with lower costs of compliance. Using our findings to calibrate a structural model, we show that doubling the duration of the restriction will reduce the incentive distortion in the federal government by 2.7%, at the cost of modest decline in labor supply to the public sector. Combined, our results shed new light on the economic implications of the revolving door in the government.

Speakers

Discussants

Conference Documents