Working Papers
  • Does protectionist anti-takeover legislation lead to managerial entrenchment?
    I study a protectionist anti-takeover law introduced in 2014 that covers a subset of all firms in the economy. The law had a negative impact on shareholder value and substantially reduced affected firms' likelihood of becoming a takeover target. There is no evidence that management of those firms subsequently altered firm policies in its interest. Investment, employment, wages, profitability, financial leverage and distributions to shareholders remain unchanged. The share of annual CEO compensation consisting of equity instruments increased by 8.4 percentage points, suggesting that boards reacted to the loss in monitoring by the takeover market by increasing the pay-for-performance sensitivity.
  • Information intermediaries: How commercial bankers facilitate inter-firm alliances (with Christoph Herpfer)
    We investigate how bankers use private information to help borrowers combine resources in strategic alliances. Firms that have borrowed from the same banker are significantly more likely to enter an alliance. Even indirect connections through a banker network can facilitate alliances. Consistent with bankers overcoming informational frictions, their ability to facilitate alliances decreases with network distance, and is stronger for opaque borrowers. Alliances are associated with positive announcement returns and brokering banks are more likely to receive future underwriting mandates. We exploit quasi-exogenous variation in firms' banker networks from interstate bank branching deregulation to show that this relationship is causal.