We explore how various aspects of corporate governance influence the likelihood of a public corpo... more We explore how various aspects of corporate governance influence the likelihood of a public corporation surviving as a separate public entity, after addressing potential endogeneity that arises from competing corporate exit outcomes: acquisitions, going-private transactions, and bankruptcies. We find that some corporate governance features are more important determinants of the form of a firm's exit than many economic factors that have figured prominently in prior research. We also find evidence that outsider-dominated boards and lower restrictions on internal governance play major roles in the way firms exit public markets, particularly when a firm's industry suffers a negative shock. Overall, our results suggest that failure to recognize competing risks produces biased estimates, resulting in faulty inferences.
The views expressed herein are those of the authors and do not necessarily reflect the views of t... more The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
This study examines the performance of mutual funds managed by firms that simultaneously manage h... more This study examines the performance of mutual funds managed by firms that simultaneously manage hedge funds. We find that the reported returns of mutual funds in these ''side-by-side" associations with hedge funds significantly underperformed those of mutual funds that shared similar fund and family characteristics but differed in that they were not affiliated with hedge funds. Digging deeper into performance, we find that the underperformance was confined to return gaps, a return measure that captures the impact of unobservable managerial actions. Interestingly, mutual funds with investment styles that were most closely aligned to affiliated hedge funds generated reported-return alphas and return gaps that underperformed by the greatest amount. Finally, we find that side-by-side mutual funds received less of a contribution to performance from IPO underpricing than similar unaffiliated mutual funds or affiliated hedge funds. Evidence does not support the hypothesis that affiliations with hedge funds allow side-byside mutual funds to attract superior stock-picking talent. Our evidence does not allow us to rule out the possibility that management firms maximized fee income by strategically transferring performance from mutual funds to hedge funds.
ABSTRACT We study the impact of broadband diffusion on wage, employment, and workforce productivi... more ABSTRACT We study the impact of broadband diffusion on wage, employment, and workforce productivity levels among the communications common carriers in the US. Driven by capital-skill complementarities, broadband diffusion is expected to positively impact wages because of the need for skill and to compensate for the higher levels of output per employee, but can lead to less human capital usage because of a scale effect. Our findings show that fiber optic adoption as broadband diffusion did in fact result in improved compensation for the incrementally skilled and productive workforce, but it adversely affected employment, though not of the same magnitude. With extensive dark fiber availability in the United States, our evidence suggests an intensifying impact on wage levels, employment, and output per employee.
ABSTRACT We evaluate the impact of the various mergers of the local exchange companies that took ... more ABSTRACT We evaluate the impact of the various mergers of the local exchange companies that took place between 1988 and 2001 on several measures of performance of the firms that have undergone the mergers. Our analysis reveals that relative cash flows decrease after mergers, the pattern of accompanying sales growth is ambiguous and driven by increased market presence while the impact of mergers on the measures of efficiency and synergy are negative. If the efficiency motive is primary in influencing merger approval, then the past mergers approved have led to inefficiencies and welfare losses for the American consumer and the mergers of communication common carriers have not been in the public interest. On the other hand, given the inefficiency outcomes views that the quiet life, hubris and a quest for possible market power have motivated the mergers cannot be discarded.
ABSTRACT The corporate charter is a contract between the firm and the state. Prior literature on ... more ABSTRACT The corporate charter is a contract between the firm and the state. Prior literature on contracts suggests three primary motives for contracting: risk shifting, incentive alignment, and transaction cost minimization. We argue that the characteristics of the industry within which a firm operates should influence the design of corporate charters/bylaws because firms within an industry face similar risk shifting, incentive alignment, and transaction cost concerns, and so similar internal control and change in control concerns. Using data on a sample of U.S. corporations, we find evidence that: (1) there is substantial variation in governance provisions across industries; (2) the influence of selected industry characteristics differ across provisions; and (3) charter provisions cluster according to the industry characteristics that influence their incidence, which explains correlations between provisions within industries.
Purpose – The purpose of this paper is to evaluate the impact of the various mergers of the local... more Purpose – The purpose of this paper is to evaluate the impact of the various mergers of the local exchange companies in the USA. Design/methodology/approach – The authors evaluate all of the mergers that took place between 1988 and 2001 on several measures of performance for the firms that have undergone the mergers. Findings – The analysis reveals that the
... Corresponding author: Sumit K Majumdar, Professor of Technology Strategy, School of Managemen... more ... Corresponding author: Sumit K Majumdar, Professor of Technology Strategy, School of Management, University of Texas at Dallas, SM 33, 800 West Campbell Road, Richardson, TX 75080 ... The negative findings stream has a long history, with Kaplan (1988) and Bhagat et al. ...
We explore how various aspects of corporate governance influence the likelihood of a public corpo... more We explore how various aspects of corporate governance influence the likelihood of a public corporation surviving as a separate public entity, after addressing potential endogeneity that arises from competing corporate exit outcomes: acquisitions, going-private transactions, and bankruptcies. We find that some corporate governance features are more important determinants of the form of a firm's exit than many economic factors that have figured prominently in prior research. We also find evidence that outsider-dominated boards and lower restrictions on internal governance play major roles in the way firms exit public markets, particularly when a firm's industry suffers a negative shock. Overall, our results suggest that failure to recognize competing risks produces biased estimates, resulting in faulty inferences.
The views expressed herein are those of the authors and do not necessarily reflect the views of t... more The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
This study examines the performance of mutual funds managed by firms that simultaneously manage h... more This study examines the performance of mutual funds managed by firms that simultaneously manage hedge funds. We find that the reported returns of mutual funds in these ''side-by-side" associations with hedge funds significantly underperformed those of mutual funds that shared similar fund and family characteristics but differed in that they were not affiliated with hedge funds. Digging deeper into performance, we find that the underperformance was confined to return gaps, a return measure that captures the impact of unobservable managerial actions. Interestingly, mutual funds with investment styles that were most closely aligned to affiliated hedge funds generated reported-return alphas and return gaps that underperformed by the greatest amount. Finally, we find that side-by-side mutual funds received less of a contribution to performance from IPO underpricing than similar unaffiliated mutual funds or affiliated hedge funds. Evidence does not support the hypothesis that affiliations with hedge funds allow side-byside mutual funds to attract superior stock-picking talent. Our evidence does not allow us to rule out the possibility that management firms maximized fee income by strategically transferring performance from mutual funds to hedge funds.
ABSTRACT We study the impact of broadband diffusion on wage, employment, and workforce productivi... more ABSTRACT We study the impact of broadband diffusion on wage, employment, and workforce productivity levels among the communications common carriers in the US. Driven by capital-skill complementarities, broadband diffusion is expected to positively impact wages because of the need for skill and to compensate for the higher levels of output per employee, but can lead to less human capital usage because of a scale effect. Our findings show that fiber optic adoption as broadband diffusion did in fact result in improved compensation for the incrementally skilled and productive workforce, but it adversely affected employment, though not of the same magnitude. With extensive dark fiber availability in the United States, our evidence suggests an intensifying impact on wage levels, employment, and output per employee.
ABSTRACT We evaluate the impact of the various mergers of the local exchange companies that took ... more ABSTRACT We evaluate the impact of the various mergers of the local exchange companies that took place between 1988 and 2001 on several measures of performance of the firms that have undergone the mergers. Our analysis reveals that relative cash flows decrease after mergers, the pattern of accompanying sales growth is ambiguous and driven by increased market presence while the impact of mergers on the measures of efficiency and synergy are negative. If the efficiency motive is primary in influencing merger approval, then the past mergers approved have led to inefficiencies and welfare losses for the American consumer and the mergers of communication common carriers have not been in the public interest. On the other hand, given the inefficiency outcomes views that the quiet life, hubris and a quest for possible market power have motivated the mergers cannot be discarded.
ABSTRACT The corporate charter is a contract between the firm and the state. Prior literature on ... more ABSTRACT The corporate charter is a contract between the firm and the state. Prior literature on contracts suggests three primary motives for contracting: risk shifting, incentive alignment, and transaction cost minimization. We argue that the characteristics of the industry within which a firm operates should influence the design of corporate charters/bylaws because firms within an industry face similar risk shifting, incentive alignment, and transaction cost concerns, and so similar internal control and change in control concerns. Using data on a sample of U.S. corporations, we find evidence that: (1) there is substantial variation in governance provisions across industries; (2) the influence of selected industry characteristics differ across provisions; and (3) charter provisions cluster according to the industry characteristics that influence their incidence, which explains correlations between provisions within industries.
Purpose – The purpose of this paper is to evaluate the impact of the various mergers of the local... more Purpose – The purpose of this paper is to evaluate the impact of the various mergers of the local exchange companies in the USA. Design/methodology/approach – The authors evaluate all of the mergers that took place between 1988 and 2001 on several measures of performance for the firms that have undergone the mergers. Findings – The analysis reveals that the
... Corresponding author: Sumit K Majumdar, Professor of Technology Strategy, School of Managemen... more ... Corresponding author: Sumit K Majumdar, Professor of Technology Strategy, School of Management, University of Texas at Dallas, SM 33, 800 West Campbell Road, Richardson, TX 75080 ... The negative findings stream has a long history, with Kaplan (1988) and Bhagat et al. ...
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Papers by Rabih Moussawi