FAKULTÄT FÜR BETRIEBSWIRTSCHAFTSLEHRE Lehrstuhl für ABWL und Corporate Governance Prof. Dr. Alexandra Niessen-Ruenzi

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1 Universität Mannheim Mannheim Besucheradresse: L9, Mannheim Telefon 0621/ Seminar FSS2018 "Asset Management and Corporate Governance" Note: Odd topic number implies that topic is a literature review (6 weeks), e.g. NR1/NR3/ Even topic number implies that topic is an empirical topic (8 weeks), e.g. NR2/NR4/... TOPIC NR1/NR2: TOPIC NR3/NR4: TOPIC NR5/NR6: TOPIC NR7/NR8: Good and Bad CEOs The effect of CEO turnover on firm value Anja Kunzmann Information or speculation? Short selling before unfavorable firm news Anja Kunzmann Disposition effect among mutual fund managers Mengqiao Du Women on board and overconfidence Mengqiao Du

2 TOPIC NR1/NR2: Good and bad CEOs The effect of CEO turnover on firm value Anja Kunzmann Whether to retain or dismiss a CEO is one of the most important decisions of the board of directors. To come to this decision, the board has to evaluate the quality of the CEO as well as the CEO-firm match. These factors are not always clearly measurable. Moreover, the decision of the board could be affected by other factors that are unrelated to the skills and the fit of the CEO, e.g., the monitoring incentives of the directors or the extent of entrenchment of the CEO. Unsurprisingly, the literature has not found a consensus answer to the question of how managerial replacements affect firm value. NR1: Literature review (6 weeks) The goal of this seminar thesis is to provide a comprehensive review of the empirical finance literature that covers the effects of CEO turnovers on firm value. The main focus should be on the distinction between voluntary and forced turnover decisions, and on the variables that are used to explain the quality of these decisions (i.e., board, CEO, shareholder, firm characteristics, etc). NR2: Empirical topic (8 weeks) The goal of this seminar thesis is to examine the effect of CEO turnover on firm value. The student should build on the work by Demerjian, Lev and McVay (2012), using their measure to quantify CEO skill to answer the question whether there are good and bad CEOs, and how their replacement affects the value of the firm. The empirical work for this topic requires the use of statistical software (e.g. Stata), manipulation of data and the application of econometric methods. Some experience in this area is helpful. Data on CEO turnovers will be provided, all other databases are accessible via the university network or online. Demerjian, P., Lev, B., & McVay, S. (2012). Quantifying managerial ability: A new measure and validity tests. Management Science, 58(7), Denis, D. J., & Denis, D. K. (1995). Performance changes following top management dismissals. Journal of Finance, 50(4), Huson, M. R., Malatesta, P. H., & Parrino, R. (2004). Managerial succession and firm performance. Journal of Financial Economics, 74(2), Weisbach, M. S. (1988). Outside directors and CEO turnover. Journal of Financial Economics, 20,

3 TOPIC NR3 / NR4: Information or speculation? Short selling before unfavorable firm news Anja Kunzmann The reputation of short sellers has particularly suffered during the most recent financial crisis, when the public and even the financial regulators became concerned about potential price manipulations by short sellers. These concerns eventually resulted in a temporary ban of short sales for financial stocks by the SEC in On the contrary, most of the theoretical and empirical literature in finance has generally considered short sellers to be important contributors to efficient stock prices - by allowing negative information to be incorporated into prices more quickly, thus avoiding an overvaluation of these stocks. From these conflicting views, the question arises whether short sellers simply manipulate prices or whether they act on information about firm fundamentals and contribute to market efficiency. NR3: Literature review (6 weeks): The goal of this seminar thesis is to provide a comprehensive review of the theoretical and empirical finance literature that covers the information content of short sales and the effect of short sales on stock prices. The main focus for the empirical literature should be on short selling around the disclosure of firm news that can be distinguished as favorable and unfavorable. NR4: Empirical topic (8 weeks): The goal of this seminar thesis is to examine short selling around the announcement of firm news. The student should build on the work by Akbas et al. (2017), who analyze the predictability of negative news (e.g., analyst downgrades) using short interest. The empirical work for this topic requires the use of statistical software (e.g. Stata), manipulation of data and the application of econometric methods. Some experience in this area is helpful. All necessary databases are accessible via the university network or online. Akbas, F., Boehmer, E., Erturk, B., & Sorescu, S. (2017). Short Interest, Returns, and Unfavorable Fundamental Information. Financial Management, 46(2), Boehmer, E., Jones, C. M., & Zhang, X. (2008). Which Shorts Are Informed? Journal of Finance, 63(2), Boehmer, E., Jones, C. M., & Zhang, X. (2015). What Do Short Sellers Know? Working Paper. 3

4 TOPIC NR5/NR6: Disposition effect among mutual fund managers Mengqiao Du The disposition effect refers to the investors tendency to sell winner stocks too early and ride loser stocks too long. The concept is initiated by Shefrin and Statman (1985) and has been widely studied thereafter. Odean (1998) shows that U.S. retail investors are subject to disposition bias and subsequent studies analyze the effect in detail using data for the U.S. and international markets. However, the evidence on the disposition effect among mutual fund managers is mixed. Frazzini (2006) finds the disposition effect among the mutual fund managers and relate the finding to stock price underreaction to news. On the contrary, Cici (2012) concludes that overall, U.S. equity mutual funds prefer realizing capital losses rather than capital gains. NR5: Literature review (6 weeks) The goal of this seminar thesis is to provide a comprehensive review of the empirical finance literature that covers the disposition effect, especially the disposition effect among mutual funds. The discussion can include but is not limited to the possible explanations for the disposition effect and the impact of the disposition effect on the investment performance and the capital market. NR6: Empirical topic (8 weeks) The goal of this thesis is to address the following questions: Does the disposition effect exist among mutual fund managers? How does the disposition effect influence the fund performance? The empirical work for this topic requires the use of statistical software (e.g. Stata), manipulation of data and the application of econometric methods. Some experience in this area is helpful. Raw data on U.S. mutual fund holdings will be provided and all other databases are accessible via the university network or online. Cici, G. (2012). The prevalence of the disposition effect in mutual funds trades. Journal of Financial and Quantitative Analysis, 47(4), Frazzini, A. (2006). The disposition effect and underreaction to news. Journal of Finance, 61(4), Odean, T. (1998). Are investors reluctant to realize their losses?. Journal of Finance, 53(5), Shefrin, H., & Statman, M. (1985). The disposition to sell winners too early and ride losers too long: Theory and evidence. Journal of Finance, 40(3),

5 TOPIC NR7/NR8: Women on board and overconfidence Mengqiao Du Female representation on corporate boards is widely debated. Adams and Ferreira (2009) find that U.S. female directors offer better monitoring to the firm but overall, gender diversity has a negative effect on firm performance. Focusing on overconfidence, Huang and Kisgen (2013) show evidence that male executives (CEO and CFO) exhibit more overconfidence in corporate decision-making compared to female executives. Based on the previous literature, this seminar thesis aims to assess how board gender diversity influences the corporate financing and investment behavior. NR7: Literature review (6 weeks) The goal of this seminar thesis is to provide a comprehensive literature review of existing work on how board diversity influences corporate decisions and firm performance. The main focus should be on the impact of board gender diversity. NR8: Empirical topic (8 weeks) The goal of this seminar thesis is to answer the following question: How does gender quota influence the female representation in European firms? Does board gender diversity decrease overconfidence behavior in European firms? The empirical work for this topic requires the use of statistical software (e.g. Stata), manipulation of data and the application of econometric methods. Some experience in this area is helpful. Raw data on European directors (from BoardEx) will be provided and all other databases are accessible via the university network or online. Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), Ahern, K. R., & Dittmar, A. K. (2012). The changing of the boards: The impact on firm valuation of mandated female board representation. Quarterly Journal of Economics, 127(1), Huang, J., & Kisgen, D. J. (2013). Gender and corporate finance: Are male executives overconfident relative to female executives?. Journal of Financial Economics, 108(3),