Published Papers

Collective Action and Governance Activism
with Craig Doidge, Alexander Dyck, and Hamed Mahmudi​
Review of Finance, 2019, Volume 23, Issue 5, Pages 893–933.
(PaperPublished Version)

We examine how an investor collective action organization (ICAO) enhances activism by institutional investors. The ICAO initiates private meetings with independent directors to discuss governance proposals and has incentives to engage in activism that are about six times larger than a single investor acting alone. Firms engaged by the ICAO are 58% more likely than non-engaged firms to adopt the ICAO’s governance proposals that include majority voting, say-on-pay and performance-sensitive executive pay. The ICAO’s formation elicited a positive market reaction for firms that the ICAO was likely to target. We conclude that institutional investors improve governance through collective action. 

Working Papers

When a Buyer Gets Cold Feet:
What is the Value of a Bidder Termination Provision in a Takeover?
with Zhiyao Chen, Hamed Mahmudi and Xiaofei Zhao​
Revise and Resubmit, Journal of Financial and Quantitative Analysis
(Paper; Internet Appendix

We examine bidder termination provisions, which enhance a bidder's ability to withdraw from a takeover, also known as reverse break-up fees. We liken a bidder termination provision to a real option on the target's assets, and show that the provisions create value in some takeovers and not others. We find that inclusion of the provisions and size of termination fees payable by bidders are related to the optionality of a takeover and that pricing fees appropriately may increase the value created in M&A.

The Value Implications of Mandatory Clawback Provisions
with Tor-Erik Bakke and Hamed Mahmudi
Reject and Resubmit, Journal of Accounting Research
(Paper)

We examine firm policies requiring the recoupment of erroneously awarded performance-based compensation from executives, known as clawback provisions. We study the value implications of clawback provisions by examining the stock market’s reaction to the SEC’s announcement of a proposed rule mandating their adoption. We find that clawback provisions are value-enhancing, but that firms with weak governance may resist their adoption, which is why regulation mandating clawbacks may be necessary.

Quasi-Insider Shareholder Activism:
Corporate Governance at the Periphery of Control
with Jonathan Cohn and Mitch Towner
(Paper; Internet Appendix)

We document the role of investors at the periphery of control in corporate governance.  These investors, whom we term "quasi-insiders", include founders, former CEOs, and other former officers. Quasi-insiders launch activist campaigns in smaller and worse-performing firms than traditional activists, and use aggressive tactics to seek greater control.  Their campaigns are associated with positive market reactions comparable to those in other activist campaigns, and subsequent improvements in operating performance.  The presence of a quasi-insider blockholder is associated with a significant increase in the sensitivity of CEO turnover to performance.  We conclude that quasi-insiders play a meaningful role in governance for firms that other investors might ignore.

Case Studies

Buying into the 407:
The Syndication Protocol as a New Model for Infrastructure Investing
with Alexander Dyck
International Centre for Pension Management Case Study, 2012
(Case Study​)
We examine a collaborative initiative to invest in an infrastructure asset led by a large pension fund. We discuss the merits of investing in the infrastructure for pension funds, and illustrate how pension funds may engage in collaborative direct investment and the significant advantages to this approach.

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