Publications
Common Institutional Ownership and Product Market Threats
Forthcoming, Management Science
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with Omesh Kini and Mo Shen
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The common ownership of firms can have anti-competitive effects by incentivizing collusive outcomes that maximize joint surpluses of the commonly held firms or pro-competitive effects through enhanced knowledge spillovers. Using a difference-in-differences regression methodology that exploits mergers between financial institutions as exogenous shocks to common ownership, our baseline results suggest that higher common ownership leads to greater product market fluidity (a text-based metric of competition) and generally leads to more product development and higher investments. These findings suggest that, on average, common ownership spurs dynamism in product spaces rather than tacit collusion between cross-held competitors. This is especially true in economic environments in which it is easier to take advantage of knowledge spillovers. However, common ownership can also inhibit product market competition and dynamism, especially in industries more prone to quasi-monopoly outcomes in product spaces. Implementing a one-size-fits-all regulatory policy limiting common ownership may be harmful in industries with strong spillover opportunities.
Do Classified Boards Deter Takeovers? Evidence from Merger Waves
Forthcoming, Journal of Financial and Quantitative Analysis
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with Kose John and Dalida Kadyrzhanova
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We exploit the arrival of industry-wide synergistic merger waves to identify whether classified boards deter takeover bids. In a stylized model, we show that when target classified boards are costly to bidders, their negative effect on takeover likelihood should be more pronounced during merger waves. Using a sample of takeover bids in the United States between 1990 and 2016, we find strong evidence supporting this prediction. The results are robust to accounting for the benefits of classified boards and controlling for other antitakeover provisions. Our findings suggest that classified boards effectively
reduce a firm’s exposure to the takeover market.
Working Papers
Director Networks, Stakeholder Orientation, and the Objective of the Firm
with Omesh Kini and Mo Shen
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We exploit the network of director interlocks to examine the influence of the board’s stakeholder orientation on the firm’s disposition towards its stakeholders, director selection, and valuation. Using measures of stakeholder orientation of the board and the firm, we find that the board’s stakeholder orientation subsequently affects the firm’s stakeholder orientation. Further, prospective directors are more likely to be chosen if they can increase the alignment of stakeholder orientation between the board and the firm. Finally, the divergence in stakeholder orientation between the board and the firm reduces firm value, especially when the board’s advisory role is more critical.
Research in Progress
Information Flows, Stock Return Co-movements, and Interlocked Directors
with Omesh Kini