2024 Corporate Governance Symposium

Weinberg Center for Corporate Governance and ECGI 

2024 Corporate Governance Symposium

  • 15 March 2024
  • University of Delaware, Newark, USA
University of Delaware Lerner College of Business & Economics
Weinberg Center for Corporate Governance and ECGI 
 

2024 Corporate Governance Symposium
 and
John L. Weinberg/IRRCi Research Paper Award Competition

 

Conference
 Friday, 15 March 2024
08.15 – 17.20 EDT (13.15 – 22.20 CET)
 
Location
University of Delaware, Newark, USA
 

Register here

In-person and Live-stream
Registration deadline - March 10th17.00 EDT
Registration fee$150 
 
Organisers
Laura Field (University of Delaware and ECGI)
Fei Xie (University of Delaware and ECGI)
 
 

ABOUT THE EVENT

 

In collaboration with the European Corporate Governance Institute (ECGI), the John L. Weinberg Center for Corporate Governance and the Department of Finance at the Lerner College of Business and Economics at the University of Delaware will host its 2024 annual corporate governance symposium. The winners of the 2024 John L. Weinberg/IRRCi $10,000 Research Paper Award competition will be announced during the program. The papers included in the symposium collectively address new developments and critical issues within the area of corporate governance.

Conference Location: Clayton Conference Center (U. of Delaware), 100 David Hallowell Dr., Newark, DE 19716

Register here for the conference. You can register in person or attend online. The deadline to register is March 10th, 17.00 EDT, and the registration fee is $150

General inquiries regarding the competition or the Symposium should be directed to Louisa Cresson at Weinberg-corp-gov@udel.edu.

Please note that the selection of winners/finalists, if any, is at the sole discretion of the John L. Weinberg Center for Corporate Governance.  The Weinberg Center fully anticipates awarding up to three $10,000 prizes but reserves the right to select no papers as winners in the event papers submitted do not meet the above guidelines and/or the Center does not believe any paper is worthy of the award.

Information

Address:
University of Delaware, Newark, USA
Contact:
Louisa Cresson
University of Delaware

FRIDAY, 15 MARCH 2024 | 08:15 EDT (13:15 CET)

07:30

Registration & Breakfast

08:15

Welcome Remarks & Award Announcement

Session 1 | ESG Issues

Back to full programme

Do Consumers Care About ESG? Evidence from Barcode-Level Sales Data

Time:
08:30h

Authors: Jean-Marie Meier, Henri Servaes, Jiaying Wei, Steven Chong Xiao

Abstract

Using granular barcode-level sales data from retail stores, we show that envi ronmental and social (E&S) ratings positively relate to local sales, especially in counties with more Democratic-leaning and higher-income households. Higher ratings of a firm’s product market rivals negatively affect a firm’s sales. Controlling for product-year-level heterogeneity, monthly product sales decline after negative f irm news on E&S issues. Finally, immediately after major natural and environ mental disasters, sales in counties close to the disasters become more sensitive to E&S ratings. Our study provides direct evidence that E&S investments affect consumer demand–the cash flow channel of ESG.

Speakers

Discussants

Conference Documents

Back to full programme

Polarization, Purpose and Profit

Time:
09:10h

Authors: Daniel Ferreira, Radoslawa Nikolowa

Abstract

We present a model in which firms compete for workers who have a taste for a nonpecuniary job attribute, such as purpose, sustainability, ES/CSR, or working con ditions. Firms can invest in flexible production technologies that allow them to create jobs with different levels of the desirable job attribute. In a competitive equilibrium, f lexible firms become polarized and cater to workers with extreme preferences for the job attribute. Firm polarization increases with technological progress and industry concentration. More polarized sectors have higher profits, lower average wages, and a lower labor share of value added. Traditional investors prefer to buy shares in po larized sectors, while socially responsible investors prefer to invest in less polarized sectors. Firms in more polarized sectors are more valuable and have higher stock re turns than firms in less polarized sectors.

 

Speakers

Discussants

Conference Documents

Back to full programme

Diversity, Equity, and Inclusion

Time:
09:50h

Authors: Alex Edmans, Caroline Flammer, Simon Glossner

Abstract

This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure. This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the work force, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initia tives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.

Speakers

Discussants

Conference Documents

10:30

Coffee break

Session 2 | Directors

10:45

Do board connections between product market peers impede competition?

Speakers:
Discussant:
Back to full programme

Do board connections between product market peers impede competition?

Time:
10:45h

Authors: Radhakrishnan Gopalan, Renping Li, Alminas Zaldokas

Abstract

After a new direct board connection is formed to a product market peer, a firm’s gross margin increases by 0.8 p.p. Gross margin also rises by 0.4 p.p. after a connection is formed to a peer indirectly through a third intermediate firm. Using barcode-level data, we further show that new board connections are related to higher prices of consumer goods and a greater tendency to reduce head-on competition. Such board connections have positive profitability spillovers on the closest rivals, and the effects are stronger when the newly connected peers share corporate customers, have more similar business descriptions, or are closer geographically.

Speakers

Discussants

Conference Documents

Back to full programme

Voting Rationales

Time:
11:25h

Authors: Roni Michaely, Silvina Rubio, Irene Yi

Abstract

We examine why institutional investors vote the way they vote on director elec tions, using a novel dataset on voting rationales provided by institutional investors. We find that the most important reasons for opposing directors are board inde pendence, board diversity, tenure, firm governance, and busyness; institutional investors are also increasingly voting against directors to hold them accountable for failure to address environmental and social issues. We find that institutional investors’ concerns are well-grounded: companies with low board gender diver sity receive more rationales on board diversity, similar for companies with long director tenure and busy directors. This is consistent with institutional investors devoting significant effort toward governance research. Finally, companies with high dissent voting related to board diversity, tenure, and busyness improve their board composition in the following year. Our results suggest that directors are willing to address concerns that result in high shareholder dissent, and voting rationales can be an effective tool to communicate the source of dissent.

Speakers

Discussants

Conference Documents

12:05

Lunch Break and Presentation of winner of ACC/Weinberg Carl Liggio Memorial Award

Back to full programme

Specialist Directors

Time:
13:00h

Authors: Yaron Nili, Roy Shapira

Speakers

Discussants

Conference Documents

Session 3 | Generative AI & Finance

Back to full programme

ChatGPT and Corporate Policies

Time:
13:40h

Authors: Manish Jha, Jialin Qian, Michael Weber, Baozhong Yang

Abstract

Wecreate afirm-level ChatGPTinvestmentscore, based onconference calls, that mea sures managers’ anticipated changes in capital expenditures. We validate the score with interpretable textual content and its strong correlation with CFO survey responses. The investment score predicts future capital expenditure for up to nine quarters, controlling for Tobin’s q and other determinants, implying the investment score provides incremen tal information about firms’ future investment opportunities. The investment score also separately forecasts future total, intangible, and R&D investments. High-investment-score f irmsexperience significant negative future abnormal returns. We demonstrate ChatGPT’s applicability to measure other policies, such as dividends and employment.

Speakers

Discussants

Conference Documents

Back to full programme

Dissecting Corporate Culture Using Generative AI– Insights from Analyst Reports

Time:
14:20h

Authors: Kai Li, Feng Mai, Rui Shen, Chelsea Yang, and Tengfei Zhang

Abstract

Our study is among the first in finance, accounting, and economics to apply generative AI models as reasoning agents on analyst reports to gain insights into analysts’ views of corporate culture. We employ generative AI (ChatGPT) to analyze 2.4 million analyst reports between 2000 and 2020. Generative AI organizes analysts’ views into a knowledge graph that links different cultural values to their perceived causes and effects. In terms of influencing factors for corporate culture, analysts identify business strategy as a key factor for a large number of cultural values – customer-oriented, operations-oriented, innovation, results-oriented, adaptability, integrity, and risk control; and management team for teamwork, innovation, results-oriented, adaptability, integrity, risk control, and people-oriented values. In terms of business outcomes shaped by corporate culture, analysts identify innovation and adaptability as affecting almost all aspects of business operations, ranging from market share and growth to corporate ESG practices, while other values such as customer-oriented, operation-oriented, or people-oriented have less impact on business outcomes. We further provide evidence that analysts’ views of culture are distinct from values presented on corporate websites, and/or from the views of executives and employees. Finally, we show that analysts’ views of corporate culture are reflected in their stock recommendations and target price forecasts as well as impact price reactions to the release of their reports. We conclude that analysts’ research on corporate culture offers new insights into its causes and effects, and that we are closer to establishing the culture-firm value link.

Speakers

Discussants

Conference Documents

15:00

Coffee break

Session 4 | Regulations and Disclosure

Back to full programme

The Social Cost of Liquidity Disclosure: Evidence from Hospitals

Time:
15:15h

Authors: Thomas Bourveau, Xavier Giroud, Yifan Ji, Xuelin Li

Abstract

We study the social costs of liquidity transparency in the context of non-profit U.S. hospitals. We find that, following a reform that mandates non-profits to disclose more information about their liquidity, hospitals with ex-ante low liquidity take actions to improve their liquidity. They do so by boosting their revenues and profit margins at the expense of service quality. Specifically, we show that these additional cash flows are generated by admitting more patients and charging higher payments. The higher payments reflect a higher propensity to overtreat patients with longer hospital stays and unnecessarily intensive diagnosis processes. These operational changes generate welfare costs such as delays in administering procedures for life-threatening diseases.

Speakers

Discussants

Conference Documents

15:55

Regulatory Costs and Vertical Integration: Evidence from Supply Chain Disclosure Regulations

Speakers:
Discussant:
Back to full programme

Regulatory Costs and Vertical Integration: Evidence from Supply Chain Disclosure Regulations

Time:
15:55h

Author: Enshuai Yu

Abstract

I study whether and how supply chain disclosure regulations shape corporate boundaries, particularly, vertical integration decisions. I employ a2 010 California disclosure mandate for firms’ efforts to eradicate human trafficking and slavery in supply chains. I hypothesize that by imposing potential costs on focal firms including litigation risk, reputational costs, and supply chain information acquisition and monitoring costs, this disclosure regulation shifts cost-benefit tradeoffs of firms’ make-or-buy decisions and incentivizes firms to enhance vertical integration within supply chains. Difference-in-differences analyses demonstrate that following the regulation, treated firms make more vertical acquisitions, especially upstream, relative to control firms. The effect is concentrated among firms facing greater stakeholder pressure (e.g.,plaintiffs, consumers, NGOs, and shareholder activists) and firms with higher sourcing risk or asset specificity. Also, following the regulation, treated firms increase overall vertical integration and reduce outsourcing to suppliers. In addition, treated firms exhibit more voluntary disclosure of vertical integration activities, business segments, product similarity to upstream firms, and strategic alliance activity. Collectively, my findings suggest that supply chain disclosure regulations incentivize firms to become more vertically integrated within supply chains.

Speakers

Discussants

Conference Documents

Back to full programme

Pay for Performance? CEO Compensation Alignment Post-SEC Rule Change

Time:
16:35h

Authors: Aiyesha Dey, Berk Sensoy, Austin Starkweather, Joshua T. White

Abstract

We analyze the impact of the SEC’s new Pay Versus Performance rules on executive compensation disclosure and the market response. We find that the newly disclosed compensation actually paid metricis robustly related to shareholder returns, suggesting intentional alignment of management and shareholder interests.The new disclosures provide investors with novel information about the alignment of CEO compensation with firm performance. Investors respond positively when manager compensation actually paid falls after poor stock performance. They also show increased voting support when compensation actually paid suggests managerial incentives are aligned with shareholder returns. Our findings have implications for regulatory impact and firm strategies inexecutive paydesign and disclosure.

Speakers

Discussants

Conference Documents

17:30

Post Conference Dinner

Speakers

Presentations

Welcome Remarks & Award Announcement

Back to all presentations

Welcome Remarks & Award Announcement

Time:
08:15h

Speakers

Do Consumers Care About ESG? Evidence from Barcode-Level Sales Data

Back to all presentations

Do Consumers Care About ESG? Evidence from Barcode-Level Sales Data

Time:
08:30h

Authors: Jean-Marie Meier, Henri Servaes, Jiaying Wei, Steven Chong Xiao

Abstract

Using granular barcode-level sales data from retail stores, we show that envi ronmental and social (E&S) ratings positively relate to local sales, especially in counties with more Democratic-leaning and higher-income households. Higher ratings of a firm’s product market rivals negatively affect a firm’s sales. Controlling for product-year-level heterogeneity, monthly product sales decline after negative f irm news on E&S issues. Finally, immediately after major natural and environ mental disasters, sales in counties close to the disasters become more sensitive to E&S ratings. Our study provides direct evidence that E&S investments affect consumer demand–the cash flow channel of ESG.

Speakers

Discussants

Conference Documents

Back to all presentations

Polarization, Purpose and Profit

Time:
09:10h

Authors: Daniel Ferreira, Radoslawa Nikolowa

Abstract

We present a model in which firms compete for workers who have a taste for a nonpecuniary job attribute, such as purpose, sustainability, ES/CSR, or working con ditions. Firms can invest in flexible production technologies that allow them to create jobs with different levels of the desirable job attribute. In a competitive equilibrium, f lexible firms become polarized and cater to workers with extreme preferences for the job attribute. Firm polarization increases with technological progress and industry concentration. More polarized sectors have higher profits, lower average wages, and a lower labor share of value added. Traditional investors prefer to buy shares in po larized sectors, while socially responsible investors prefer to invest in less polarized sectors. Firms in more polarized sectors are more valuable and have higher stock re turns than firms in less polarized sectors.

 

Speakers

Discussants

Conference Documents

Back to all presentations

Diversity, Equity, and Inclusion

Time:
09:50h

Authors: Alex Edmans, Caroline Flammer, Simon Glossner

Abstract

This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure. This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the work force, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initia tives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.

Speakers

Discussants

Conference Documents

Do board connections between product market peers impede competition?

Back to all presentations

Do board connections between product market peers impede competition?

Time:
10:45h

Authors: Radhakrishnan Gopalan, Renping Li, Alminas Zaldokas

Abstract

After a new direct board connection is formed to a product market peer, a firm’s gross margin increases by 0.8 p.p. Gross margin also rises by 0.4 p.p. after a connection is formed to a peer indirectly through a third intermediate firm. Using barcode-level data, we further show that new board connections are related to higher prices of consumer goods and a greater tendency to reduce head-on competition. Such board connections have positive profitability spillovers on the closest rivals, and the effects are stronger when the newly connected peers share corporate customers, have more similar business descriptions, or are closer geographically.

Speakers

Discussants

Conference Documents

Back to all presentations

Voting Rationales

Time:
11:25h

Authors: Roni Michaely, Silvina Rubio, Irene Yi

Abstract

We examine why institutional investors vote the way they vote on director elec tions, using a novel dataset on voting rationales provided by institutional investors. We find that the most important reasons for opposing directors are board inde pendence, board diversity, tenure, firm governance, and busyness; institutional investors are also increasingly voting against directors to hold them accountable for failure to address environmental and social issues. We find that institutional investors’ concerns are well-grounded: companies with low board gender diver sity receive more rationales on board diversity, similar for companies with long director tenure and busy directors. This is consistent with institutional investors devoting significant effort toward governance research. Finally, companies with high dissent voting related to board diversity, tenure, and busyness improve their board composition in the following year. Our results suggest that directors are willing to address concerns that result in high shareholder dissent, and voting rationales can be an effective tool to communicate the source of dissent.

Speakers

Discussants

Conference Documents

Back to all presentations

Specialist Directors

Time:
13:00h

Authors: Yaron Nili, Roy Shapira

Speakers

Discussants

Conference Documents

Back to all presentations

ChatGPT and Corporate Policies

Time:
13:40h

Authors: Manish Jha, Jialin Qian, Michael Weber, Baozhong Yang

Abstract

Wecreate afirm-level ChatGPTinvestmentscore, based onconference calls, that mea sures managers’ anticipated changes in capital expenditures. We validate the score with interpretable textual content and its strong correlation with CFO survey responses. The investment score predicts future capital expenditure for up to nine quarters, controlling for Tobin’s q and other determinants, implying the investment score provides incremen tal information about firms’ future investment opportunities. The investment score also separately forecasts future total, intangible, and R&D investments. High-investment-score f irmsexperience significant negative future abnormal returns. We demonstrate ChatGPT’s applicability to measure other policies, such as dividends and employment.

Speakers

Discussants

Conference Documents

Dissecting Corporate Culture Using Generative AI– Insights from Analyst Reports

Back to all presentations

Dissecting Corporate Culture Using Generative AI– Insights from Analyst Reports

Time:
14:20h

Authors: Kai Li, Feng Mai, Rui Shen, Chelsea Yang, and Tengfei Zhang

Abstract

Our study is among the first in finance, accounting, and economics to apply generative AI models as reasoning agents on analyst reports to gain insights into analysts’ views of corporate culture. We employ generative AI (ChatGPT) to analyze 2.4 million analyst reports between 2000 and 2020. Generative AI organizes analysts’ views into a knowledge graph that links different cultural values to their perceived causes and effects. In terms of influencing factors for corporate culture, analysts identify business strategy as a key factor for a large number of cultural values – customer-oriented, operations-oriented, innovation, results-oriented, adaptability, integrity, and risk control; and management team for teamwork, innovation, results-oriented, adaptability, integrity, risk control, and people-oriented values. In terms of business outcomes shaped by corporate culture, analysts identify innovation and adaptability as affecting almost all aspects of business operations, ranging from market share and growth to corporate ESG practices, while other values such as customer-oriented, operation-oriented, or people-oriented have less impact on business outcomes. We further provide evidence that analysts’ views of culture are distinct from values presented on corporate websites, and/or from the views of executives and employees. Finally, we show that analysts’ views of corporate culture are reflected in their stock recommendations and target price forecasts as well as impact price reactions to the release of their reports. We conclude that analysts’ research on corporate culture offers new insights into its causes and effects, and that we are closer to establishing the culture-firm value link.

Speakers

Discussants

Conference Documents

The Social Cost of Liquidity Disclosure: Evidence from Hospitals

Back to all presentations

The Social Cost of Liquidity Disclosure: Evidence from Hospitals

Time:
15:15h

Authors: Thomas Bourveau, Xavier Giroud, Yifan Ji, Xuelin Li

Abstract

We study the social costs of liquidity transparency in the context of non-profit U.S. hospitals. We find that, following a reform that mandates non-profits to disclose more information about their liquidity, hospitals with ex-ante low liquidity take actions to improve their liquidity. They do so by boosting their revenues and profit margins at the expense of service quality. Specifically, we show that these additional cash flows are generated by admitting more patients and charging higher payments. The higher payments reflect a higher propensity to overtreat patients with longer hospital stays and unnecessarily intensive diagnosis processes. These operational changes generate welfare costs such as delays in administering procedures for life-threatening diseases.

Speakers

Discussants

Conference Documents

Regulatory Costs and Vertical Integration: Evidence from Supply Chain Disclosure Regulations

Back to all presentations

Regulatory Costs and Vertical Integration: Evidence from Supply Chain Disclosure Regulations

Time:
15:55h

Author: Enshuai Yu

Abstract

I study whether and how supply chain disclosure regulations shape corporate boundaries, particularly, vertical integration decisions. I employ a2 010 California disclosure mandate for firms’ efforts to eradicate human trafficking and slavery in supply chains. I hypothesize that by imposing potential costs on focal firms including litigation risk, reputational costs, and supply chain information acquisition and monitoring costs, this disclosure regulation shifts cost-benefit tradeoffs of firms’ make-or-buy decisions and incentivizes firms to enhance vertical integration within supply chains. Difference-in-differences analyses demonstrate that following the regulation, treated firms make more vertical acquisitions, especially upstream, relative to control firms. The effect is concentrated among firms facing greater stakeholder pressure (e.g.,plaintiffs, consumers, NGOs, and shareholder activists) and firms with higher sourcing risk or asset specificity. Also, following the regulation, treated firms increase overall vertical integration and reduce outsourcing to suppliers. In addition, treated firms exhibit more voluntary disclosure of vertical integration activities, business segments, product similarity to upstream firms, and strategic alliance activity. Collectively, my findings suggest that supply chain disclosure regulations incentivize firms to become more vertically integrated within supply chains.

Speakers

Discussants

Conference Documents

Back to all presentations

Pay for Performance? CEO Compensation Alignment Post-SEC Rule Change

Time:
16:35h

Authors: Aiyesha Dey, Berk Sensoy, Austin Starkweather, Joshua T. White

Abstract

We analyze the impact of the SEC’s new Pay Versus Performance rules on executive compensation disclosure and the market response. We find that the newly disclosed compensation actually paid metricis robustly related to shareholder returns, suggesting intentional alignment of management and shareholder interests.The new disclosures provide investors with novel information about the alignment of CEO compensation with firm performance. Investors respond positively when manager compensation actually paid falls after poor stock performance. They also show increased voting support when compensation actually paid suggests managerial incentives are aligned with shareholder returns. Our findings have implications for regulatory impact and firm strategies inexecutive paydesign and disclosure.

Speakers

Discussants

Conference Documents

Panel Discussions

Session 1 | ESG Issues

Back to all panel discussions

Session 1 | ESG Issues

Time:
06:07h

Session 2 | Directors

Back to all panel discussions

Session 2 | Directors

Time:
06:07h

Session 3 | Generative AI & Finance

Back to all panel discussions

Session 3 | Generative AI & Finance

Time:
06:07h

Session 4 | Regulations and Disclosure

Back to all panel discussions

Session 4 | Regulations and Disclosure

Time:
06:07h