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Accounting and Finance Department Research Seminar

When: Friday, November 5, 2021
10:00 AM - 11:15 AM
Where: > See description for location
Description: Subject: Accounting and Finance Department Research Seminar
The Accounting and Finance Department announces the following research seminar.
Speaker: Associate Professor. Jeffrey Chen (North Dakota State University)

Title: Proxy Contests and Debt Contracting: The Interplay of Managerial, Shareholder, and Creditor Incentives

Date: Friday, November 5, 2021
Time: 10:00-11:15 AM
Location: via Zoom Meeting
https://umassd.zoom.us/j/4387551509?pwd=bVB2QzdtRmFCdkk1WTVQSUxHMS9iQT09
Please contact Prof. Hongkang Xu at hxu5@umassd.edu for Meeting ID and Passcode.

Abstract: We evaluate how heterogeneity in the strategic interplay among shareholders, creditors, and managers influences debt contracting behavior around proxy contests. We find that, subsequent to proxy contests, new loan originations have significantly higher spreads and more stringent non-pricing contracting terms. The effect, however, occurs largely in contest firms where CEOs are provided with tournament-based risk-taking incentives. Further, creditor simultaneous equity holdings and CDS trading attenuate contests' impact. Finally, contests that culminate in voting and dissident victory experience the largest increase in loan pricing. Overall, our results suggest an increase in the agency cost of debt subsequent to proxy contests, particularly when managerial risk-taking incentives are high, creditors do not simultaneously hold target firms' equity or have no access to the CDS market to seek protection.

For additional information, please contact Prof. Hongkang Xu at hxu5@umassd.edu.
Contact: > See Description for contact information
Topical Areas: Faculty, Students, Academic Affairs, Accounting and Finance, _Charlton College of Business, Lectures and Seminars