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on Corporate Finance |
| By: | Justin Benefield; Matt Flynn; Sean Salter |
| Abstract: | Using REITs as a laboratory to isolate the advisory role of the board of directors, we determine that directors with executive or governance experience in finance and accounting create significant value. Adding “high-value” directors is associated with an increase in monthly returns of between 1.1% and 2%, along with a 50-basis point increase in risk-adjusted return. Cumulative abnormal returns indicate that high-value directors are added to underperforming REITs, and results hold when controlling for endogeneity. High-value board members increase capital use efficiency, sell underperforming properties, and focus future investments on outperforming submarkets, while having higher pay-to-performance sensitivity and shorter tenure than average directors. |
| Keywords: | Corporate Governance; Real Estate Investment Trusts; Real Estate Operating Companies; Textual Analysis |
| JEL: | R3 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2025_76 |
| By: | Bhattacharya, Sulagna |
| Abstract: | Geopolitical risk has emerged as a persistent feature of the global business environment, yet its impacts on domestic mergers and acquisitions (M&A) remain underexplored, particularly in emerging economies with distinctive institutional contexts. This study examines how geopolitical risk influences M&A deal failure in India and whether acquirers’ corporate social responsibility (CSR) moderates this relationship under the country’s mandatory CSR regime. Using a sample of 377 domestic M&A deals announced between 2015–16 and 2019–20, the analysis reveals a counterintuitive pattern: higher geopolitical risk is associated with a lower likelihood of deal failure, suggesting that firms pursue domestic consolidation as a defensive hedge against external volatility. While acquirers’ CSR performance independently reduces the probability of deal failure, its interaction with high geopolitical risk increases the likelihood of failure. It indicates that strong CSR commitments may constrain financial flexibility during uncertain times, thereby heightening deal vulnerability. These results remain robust across alternative model specifications, sub-samples, and disaggregated geopolitical risk measures. By integrating geopolitical risk with a legally enforced CSR spending regime, this study provides one of the first empirical demonstrations of how macro-political turbulence and regulatory social responsibility jointly shape corporate M&A outcomes in emerging markets. These findings re-conceptualize CSR as a potential financial constraint under regulation and advance the understanding of firm behavior at the intersection of risk, responsibility, and regulation. |
| Date: | 2025–11–16 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:hztnj_v1 |
| By: | Byrne, Stephen (Central Bank of Ireland); Goodhead, Robert (Central Bank of Ireland) |
| Abstract: | This paper decomposes the sources of capital misallocation at the country and industry level in Europe. Using a comprehensive dataset of European firms from 19 countries, we find that the majority of the observed misallocation stems from persistent firm-specific distortions, with a smaller role for adjustment costs and uncertainty. We document substantial differences in the sources of misallocation across industries. Our analysis reveals strong correlations between these permanent distortions and industry-level variation in both financial factors, and factors relating to productivity. Understanding the factors driving capital misallocation is important for policymakers seeking to address productivity constraints and stimulate growth in the long run. |
| JEL: | E0 O11 O4 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:11/rt/25 |