My research is focused on the understanding of the effects of ownership structure on a firm’s behavior in markets without perfect competition.
You can find the links to my working papers below:
A connection between shareholders’ portfolios and directors’ tenures
I present evidence that mutual fund’s portfolio structure matters for its voting decisions, and that director elections, the most common type of corporate elections, have delayed consequences for nominees’ career prospects. In an event study of funds’ mergers, I find that a merger affects the acquiring mutual fund’s voting behavior. I observe higher chances of future non-nomination for directors with lower shareholder support. This result resonates with the literature on shareholder dissent. I find that low shareholder support is also associated with a notable decrease in the length of director’s tenure at a company.
Funds of a feather: Influencing corporate elections by voting together (Job Market Paper)
I analyze the role of shareholders’ portfolio / ownership structure on voting participation in director elections. I find that portfolio composition matters for how mutual funds vote. Funds with more similar portfolios are more likely to cast identical votes. An increase in within-group similarity of mutual funds’ portfolios leads to an increase in the number of broker “Non-Votes”. Thus, highly diversified horizontal shareholding causes lower participation (“rational apathy’’) among other shareholders. This effect gives widely diversified cohorts of mutual funds, shareholders of the firm, a higher marginal influence at director elections than their plain share of ownership would suggest.
Objective function of a non-price-taking firm with heterogeneous shareholders
In this paper, I derive the objective function of a firm with heterogeneous shareholders. In contrast to Fisher separation theorem, I drop the price-taking assumption. Therefore, shareholders have no unanimous preferences for profit maximization. I allow shareholders to act strategically by omitting the conditional sincerity assumption and by accounting for possible correlation in their votes. I derive the exact form of the objective function and provide the equilibrium existence conditions. The resulting objective function can be approximated by a weighed sum of shareholders portfolios’ profit. Shareholder groups with positive within group correlation carry greater weight.
Common Ownership Equilibrium Existence and its Properties (3rd-year paper)
This paper studies an equilibrium model of competition between firms under partial common ownership. Shareholders choose how to vote for managers, who compete for votes by proposing alternative product market strategies. Firms interact as in a Cournot model with differentiated goods. Shareholders have heterogeneous portfolios, and some may hold shares in competing firms. We show that (i) an equilibrium exists, (ii) is unique under certain conditions, and (iii) can be estimated numerically regardless of initial guess. The model suggests a measure of common ownership concentration, PHHI, that avoids some of the pitfalls of the often-used MHHI delta measure and retains benefits, such as nesting the HHI measure of market concentration in the absence of common ownership. In particular, PHHI treats all shareholders with identical portfolios (and thus competitive preferences) as a single shareholder. This feature makes PHHI unsusceptible to manipulation by redistribution of shares among minority shareholders that would change MHHI, yet without a change in their competitive preferences, and therefore has desirable properties for regulatory agencies.