Research Interests:

My research focuses on corporate governance. I am particularly passionate about research projects with rich institutional details whose results have important implications for practitioners.

Academic Publications:

Racial Diversity Exposure and Firm Responses Following the Murder of George Floyd

George Floyd's murder caused many firms to reveal how exposed they are to racial diversity issues. We examine investor and firm behaviors after this socially significant event to provide evidence on the valuation effects of the exposure and ensuing corporate responses. We develop a text-based measure of a firm's exposure to racial diversity issues from conference call transcripts and find that, after the murder of George Floyd, firms with diversity exposure experience a stock price decrease of approximately 0.7% around the date of the conference call. We provide evidence that this effect is attributable to race-related exposure and not gender-related exposure. Initiatives taken by firms mitigate the negative market reaction. We document that firms with racial diversity exposure respond by appointing Black directors. The stock market views appointments of Black directors more favorably after George Floyd's murder, except when they are perceived as symbolic. We also find that firms with greater exposure to racial diversity are more likely to establish diversity, equity, and inclusion (DEI) departments, appoint DEI leaders, specify diversity goals, increase supply chain diversity, and donate to racial justice causes. Our paper provides evidence that exposure to racial diversity issues adversely affects firm value, and companies address the exposure by taking actions.

Working Papers:

Proxy Advisors' Recipe for Compensation Analysis

I explore a novel setting in which ISS, the most prominent proxy advisor, has partnership arrangements with compensation consultants ("partner consultants"). I find that firms that engage partner consultants reduce the incidence of ISS negative recommendations for say-on-pay and equity compensation plan proposals by 21% to 30%, compared to the unconditional probability. In addition, these firms provide roughly 7% higher compensation to their CEOs. My results also show that, when voting for say-on-pay proposals, shareholders of firms that engage partner consultants underweight positive recommendations from ISS. Overall, my findings are consistent with firms obtaining incremental information about the compensation model of ISS by engaging partner consultants. Firms exploit this information to reduce the likelihood of an ISS negative recommendation, while increasing executive compensation for what appears to be opportunistic reasons. The findings suggest a conflict of interest in which ISS benefits from partnership arrangements that could ultimately hurt shareholders.

Front-Loaded Equity Awards: An Efficient Contracting or Rent Extraction Tool?

Front-loaded equity awards (FLEAs) are one-time equity grants intended as compensation for multiple years. This type of compensation design has been criticized by activists, proxy advisors, and some institutional investors. We manually identify FLEAs and find that 9.1% of the firms in our sample grant the award to their CEOs at least once. Although FLEAs provide a large amount of compensation in the year of the grant when compared to annual equity awards, we do not find evidence that they provide excess compensation throughout the entire period they are intended to cover. Consistent with the efficient contracting hypothesis, we find that firms facing greater growth opportunities, announcing a significant acquisition, and hiring new CEOs make more frequent use of FLEAs. We fail to find support for the rent extraction hypothesis, with the exception that firms avoid FLEAs when shareholder voting rights are stronger. We also explore how stakeholders perceive FLEAs and find a positive and statistically significant stock market reaction of roughly 1% to the announcement of the grant. In addition, we find that ISS is 39% more likely to recommend against say-on-pay after a FLEA is granted, and the vast majority of the negative shareholder votes are driven by ISS recommendations. Overall, our results are consistent with the survey conducted by Edmans, Gosling, and Jenter (2023), which finds that most directors would sacrifice shareholder value to avoid CEO pay controversy.

Works in Progress:

Shareholder Disclosures of Voting Intentions