May 16, 2024 / 01:00 p.m. - 02:00 p.m. / TC.5.15
Markus Parlasca (WU Vienna)
"Voting and Trading on Proxy Advice" (joint with Paul Voss)

Abstract: This paper studies how proxy advice affects corporate decision-making when shareholders can vote and trade. Because proxy advice correlates shareholders’ votes, it is informative about the vote outcome. We show that the predictability of the vote outcome induces shareholders with conflicting information vis-à-vis the proxy advice to sell their shares – precisely when their vote would be most valuable for information aggregation. We find that proxy advice can thus reduce firm value and more precise proxy advice may not improve corporate decision making. Our results give rise to new empirical predictions and have implications for regulation.
 

May 15, 2024 / 12:00 p.m. - 01:00 p.m. / TC.3.08
Kristian Miltersen (CBS Copenhagen Business School)
"Incremental Issuance in a Model of Risky Debt with Proportional Issuance Costs" (joint with Jens Dick-Nielsen and Walter N. Torous)

Abstract: We study incremental issuance of corporate debt with and without commitment in a model where earnings are log-normally distributed.  We provide a non-smooth Markov perfect equilibrium solution as an alternative to the smooth Markov perfect equilibrium developed by DeMarzo and He (2021).  In our no commitment non-smooth equilibrium, equity holders gain positive tax benefits to leverage, there is a unique optimal leverage ratio, and a unique optimal maturity structure of debt.
 

March 07, 2024 / 12:30 p.m. - 01:30 p.m. / TC.3.05
Luana Zaccaria (Einaudi Institute for Economics and Finance)
"Welcome on Board:The Spillover Effects of Mandatory Gender Quotas" (joint with L. Guiso and F. Schivardi)

Abstract: The efficacy of board quotas as a policy to foster gender balance in business relies on the expectation that its effect can trickle down vertically inside the firms targeted by quota laws ‑ improving the working conditions of other female employees ‑ and/or spill over horizontally to other firms in the economy. Research has found little evidence so far for vertical trickle-down effects. We shift focus and investigate horizontal spillovers. We examine the 2011 Italian law that required listed and state-controlled enterprises (target companies) to significantly increase the number of board seats assigned to directors of the under-represented gender. Within the universe of Italian corporations, we identify “connected” firms as non-target firms that shared at least one board member with target companies in the years prior to the reform. We document that connected firms significantly increase the share of female board members after the reform as compared to similar non-connected firms, despite not being subject to the new law requirements. When accounting for spillover effects, the overall increase in the number of new female directors is at least twice as large as that computed on target firms alone. Connected firms are more likely to hire new female directors after the reform, and newly appointed directors, both male and female, are hired drawing from a broader geographical area, tend to have fewer prior connections with older board members, and are more likely to be firm outsiders. This suggests that the change in search technology induced by the reform may spill over to connected firms as target firms share information on new professionally selected candidates for directorship positions.