Open Access Publications

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https://udspace.udel.edu/handle/19716/31583
Open access publications by faculty, staff, postdocs, and graduate students in the Department of Finance.

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    Director networks and firm value
    (Journal of Corporate Finance, 2024-02-13) Bakke, Tor-Erik; Black, Jeffrey R.; Mahmudi, Hamed; Linn, Scott C.
    Are the professional networks of directors valuable? To separate the effect of director networks on firm value from the effect of other value-relevant director attributes, we use the unexpected deaths of directors as a shock to the director networks of interlocked directors. By studying the announcement returns and using a difference-in-differences methodology, we find the negative shock to director networks reduces the value of interlocked firms – a result that is stronger for firms that are more likely to benefit from access to information from board connections. This evidence is consistent with director networks being valuable and improving access to information.
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    Learning from Lending in the Interbank Network
    (Data Science in Science, 2023-01-30) Laux, Paul; Qian, Wei; Zhang, Haici
    Empirical analysis of a major overnight-funding network of European banks shows that, when liquidity disruptions occur in a part of the network, lending banks in other parts of the network broaden their cohorts of borrowers in the part of the network that is subject to the disruptions. Measures of this broadening are useful new statistics for the amount of information conveyed from one part of the network to another. In our setting, we call this broadening “counterparty sampling,” and present evidence that it improves the network’s stock of information about future interest rates. By comparing to linkages forecast by an LSTM deep learning model for counterparty linkages, we find that the extent of surprising new linkages predicts lower future rates. Our evidence supports the idea that interbank funding networks provide benefits of learning and information aggregation, and our measures suggest new ways of looking at sparse networks with stable structures but dynamically-changing linkages.
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    Why Are Bidder Termination Provisions Included in Takeovers?
    (Journal of Financial and Quantitative Analysis, 2021-08-10) Chen, Zhiyao; Mahmudi, Hamed; Virani, Aazam; Zhao, Xiaofei
    We present a rationale for bidder termination provisions that considers their effect on bidders’ and targets’ joint takeover gains. The provision’s inclusion can create value by enabling termination when the target becomes less valuable to the bidder than on its own, but creates a trade-off because termination may also occur when the target is more valuable to the bidder than on its own. This trade-off explains why the provision is included in only some deals, and explains variation in termination fees. Inclusion of the provision is associated with larger combined announcement returns, provided that the termination fee is priced appropriately.
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