Department of Finance

Reverse mortgages are designed to allow house-rich but cash-poor homeowners the ability to tap the equity in their homes. This unique mortgage product has several features that distinguish it from a traditional mortgage, including that no principal or interest payments are made to the lender. Using 2018 - 2020 HMDA data, I test for disparate treatment in outcomes by race, ethnicity and gender. I test for redlining disparate outcomes using the census track minority population percentage as a proxy for neighborhood and test for loan pricing disparate outcomes using the interest rate charged. I test for origination disparate outcomes by comparing approval denial rates. My findings indicate (i) that lenders are more likely to reject applications from borrowers in census tracks with higher percentages of minorities, (ii) that lenders are more likely to reject applications from minority borrowers and (iii) that lenders charge higher interest rates to minority borrowers. I do not find that lenders charge higher interest rates in census tracks with higher percentages of minorities.

In this manuscript, I present two essays which examine the role of diversity within the corporate boardroom.
The first essay determines that board compensation practices at competing firms influence the remuneration arrangements of directors. Consistent with the observational learning perspective, directors mimic the behavior of peer firms in setting their own compensation, but that diversity, in the form of gender, race/ethnicity, education, and experience moderates this relationship. Diversity also leads to better board performance measured through its impact on excess CEO compensation and CEO turnover sensitivity.
In the second essay, I document the presence of peer influence in diversity hires. As firms within an industry hire more women and minority directors, others will do the same. This type of herding behavior has both positive and negative outcomes. Firm stock and operating performance is worse in the years after a peer-driven diversity hire, yet board performance is better. I conclude that peer-driven decisions may be suboptimal, but that diversity can promote better governance in the boardroom.

The modern organization is “a nexus of contracts” among various stakeholders. In this two-essay study, I examine how contracts surrounding entrepreneurial firms, namely contracts with the U.S. government agencies as customers and contracts with venture capital (VC) firms as investors, interact.
In the first essay, I examine whether and how the ex-post government contracting activity of portfolio companies affects the performance of VC investments. Prior research establishes the impact of government customers on the contractor's operating performance and information quality. I find that government contracting improves the likelihood of successful exits via initial public offering (IPO) or acquisition and reduces the likelihood of a liquidation. I also find that the suppliers’ bargaining power relative to the government moderates the relationship between government contracting and VC investment exits. The increased suppliers’ bargaining power mitigates the positive relationship between government contracting and the likelihood of IPOs. The impact of government contracting on the likelihood of acquisitions and liquidations is more substantial for suppliers with greater bargaining power. The results are robust for reputable and non-reputable VC firms, alternative model specifications, and adjustments for potential endogeneity.

In the first essay, I examine how managerial opportunism affects corporate investment efficiency and, ultimately, firm performance. Prior research establishes corporate investment efficiency as a function of the firm’s information environment and internal governance. To measure managerial opportunism, I use an ex-ante firm level measure of managerial opportunism based on insider trading patterns and test its effects on investment efficiency and performance. Extant research associates opportunistic insider trading with opaque information environments about the firm and weak firm governance, making it an apropos proxy for opportunistic managerial behavior.
Despite the clear establishment of opportunistic insider trading as an agency problem in the literature, it remains unanswered how the managerial insider trading decision’s economic irrationality might reflect a broader agency problem that affects firm investment policy and performance. I introduce competing hypotheses that managerial opportunism may positively associate with overinvestment through “empire building” and excessive risk taking at shareholders’ expense. On the contrary, manv agerial opportunism may lead to underinvestment through rent seeking behavior. My results show that managerial opportunism decreases firm investment efficiency and negatively affects accounting and stock performance. Further tests show that both the quality of the information environment and internal governance moderate the effects of managerial opportunism, providing a unique perspective on how insider trading policy and regulation can affect corporate investment policy.

The proposed study examines the effect of CEO-board social connections on corporate policies. Motivated by the independent board view and collaborative board view, I propose two opposing hypotheses explaining the effect of CEO-board connections on corporate policies: monitoring hypothesis and advising hypothesis.
In my first essay, I validate the two competing hypotheses of CEO-board connections by investigating the effect of CEO-board connections on monitoring and advising role of the board, and firm valuation. I find that CEO-board connections have a negative effect on board monitoring and positive effect on board advising and firm valuation. The results are robust to endogeneity concerns and different model specifications. Disentangling the Channels, I also show that the predicted effect of CEO-board connections on board monitoring and advising have opposite effects on firm valuation. Lastly, I provide evidence that the effect of CEO-board connections on firm performance is stronger in firms with high growth opportunities.

Extant literature has struggled to identify definitive purpose for shareholder proposals, finding them to depend on their context. Progressively, climate change has gathered interest at annual meetings where shareholders present proposals related to the subject. The literature builds expectations for the role of obsolescence, regulation and other forms of activism to motivate innovation with respect to these proposals. The literature also establishes how diversification can serve as a defense. I test the impact that shareholder proposals have on the information environment and on the corporate behaviors of innovation and diversification. I find that capital markets are responsive to proposal pressures and that there are improvements in the information environment. I find that firms in receipt of shareholder proposals related to climate change innovate and diversify more. I find wealth enhancements for these corporate behaviors spurred by climate-related proposals. While definitive statements on causality may elude, my results suggest that shareholder proposals have real effects.

Florida Atlantic University Departmental Dashboard Indicators. Department program reviews for College of Business, Florida Atlantic University.

Florida Atlantic University Departmental Dashboard Indicators. Department program reviews for College of Business, Florida Atlantic University.

Florida Atlantic University Departmental Dashboard Indicators. Department program reviews for College of Business, Florida Atlantic University.

Florida Atlantic University Departmental Dashboard Indicators. Department program reviews for College of Business, Florida Atlantic University.