Frontiers of Corporate Governance
Saturday, Jan. 4, 2020 8:00 AM - 10:00 AM (PDT)
- Chair: Kelly Shue, Yale University
The Party Structure of Mutual Funds
AbstractWe investigate the structure of mutual funds’ corporate governance preferences as revealed by how they vote their shares in portfolio companies. We apply unsupervised learning tools from the machine learning literature to analyze a comprehensive dataset of mutual funds’ votes and find that a parsimonious two-dimensional model can explain the bulk of mutual fund voting. The two dimensions represent competing visions of shareholder rights and modes of shareholder engagement with management. Model-based cluster analysis shows that mutual funds are organized into three ‘parties’—the Traditional Governance Party, the Shareholder Intervention Party, and the Shareholder Veto Party—that follow distinctive philosophies of corporate governance and shareholders’ role. Our preference measures for mutual funds generate a range of insights about the broader system of corporate governance.
Corporate Capture of Blockchain Governance
AbstractWe develop a theory of blockchain governance. In our model, the proof-of-work system, which is the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. Our main result is that the proof-of-work system leads to a situation where the governance of the blockchain is captured by a large firm.
How Do Individual Politicians Affect Privatization? Evidence from China
AbstractThis paper investigates how politicians’ career concerns affect privatization outcomes in China. Privatizations increase firm efficiency and productivity, which help local politicians’ career advancements under GDP tournaments in China. Local politicians connected to top political leaders have high promotion chances regardless of GDP growth. Consequently, the privatizations conducted by connected local politicians achieve lower efficiency gains. For identification, we exploit discontinuities in local politicians’ connections and privatization outcomes around the compulsory retirement age of top politicians. Moreover, older and less educated politicians have lower promotion chances and thus have greater need for GDP growth and choose privatizations with better outcomes.
- G3 - Corporate Finance and Governance