FAKULTÄT FÜR BETRIEBSWIRTSCHAFTSLEHRE Lehrstuhl für ABWL und Corporate Governance Prof. Dr. Alexandra Niessen-Ruenzi Universität Mannheim Lehrstuhl für ABWL und Corporate Governance 68131 Mannheim Besucheradresse: L9, 1-2 68161 Mannheim Telefon 0621/181-1595 25.11.200925.11.2009 Master Theses HWS 2014: Topics TOPIC 1: Winning by Losing: A new method to measure long-run merger effects TOPIC 2: CEO gender and takeover returns TOPIC 3: Fixed effects in executive compensation FAKULTÄT FÜR BETRIEBSWIRTSCHAFTSLEHRE Lehrstuhl für ABWL und Corporate Governance Prof. Dr. Alexandra Niessen-Ruenzi TOPIC 1: Winning by Losing: A new method to measure long-run merger effects In the past, research has found some puzzling results regarding mergers. However, the methods with which these results are achieved have been subject to much criticism. In their working paper, Malmendier, Moretti, and Peters (2012) use data on contested mergers to estimate long-term value effects from mergers. While this method has the potential to solve some of the old problems, it may come at a cost. The main goal of this Master thesis is to critically assess the validity of their results. To do so, redo their analysis with an extended sample. Check whether the required assumptions of their method hold in your sample. In addition, compare your results with other estimates and draw conclusions. Knowledge on econometric analysis and software (STATA) is required. Introductory Literature: Malmendier, U., E. Moretti, and F. Peters, 2012, Winning by losing: Evidence on the long-run effects of mergers, Working paper. Available at: http://www.nber.org/papers/w18024. Mitchell, M. L., and Stafford, E. (2000), Managerial decisions and long-term stock price performance, The Journal of Business, 73(3), 287-329. TOPIC 2: CEO gender and takeover returns Research regularly shows negative value effects to bidders in corporate takeovers (e.g. Moeller, Schlingemann, and Stulz (2005); Loughran and Vijh (1997)). Why then do mergers occur? One explanation found in the literature is that they are driven by overconfident managers (Roll (1986)). By contrast, research on gender differences has shown women to be less overconfident than males in investment decisions and to exhibit a different bargaining behavior (Croson and Gneezy (2009)). Could these differences lead to different merger decisions for firms with female CEOs? The goal of this Master thesis is to assess the influence of CEO gender on takeover returns. The student should first review the literature on gender differences in managerial styles and on merger effects to develop useful hypotheses. Then, he/she needs to create a sample of corporate takeovers (SDC Worldwide M&A) with information on CEO gender (ExecuComp). Using this sample, first assess the value effects of the mergers using appropriate event-study procedures (CRSP). How are they related to CEO gender and what does this tell us about the motivation for mergers? Knowledge on econometric analysis and software (STATA) is required. Introductory Literature: Moeller, S. B., F. P. Schlingemann, and R. M. Stulz, (2004), Firm size and the gains from acquisitions, Journal of Financial Economics 73 (2), 201-228. Loughran, T., and Vijh, A. M. (1997), Do long‐term shareholders benefit from corporate acquisitions?, The Journal of Finance, 52(5), 1765-1790. Croson, R., and Gneezy, U. (2009), Gender differences in preferences, Journal of Economic Literature, 448474. 2 FAKULTÄT FÜR BETRIEBSWIRTSCHAFTSLEHRE Lehrstuhl für ABWL und Corporate Governance Prof. Dr. Alexandra Niessen-Ruenzi TOPIC 3: Fixed effects in executive compensation A large strand of literature in corporate governance deals with the question of what determines executive compensation. Yet, the research may be subject to omitted variable bias from unobserved manager and/or firm characteristics. Graham, Li and Qiu (2011, GLQ) introduce a method based on Abowd, Kramarz and Margolis (1999, AKM) to separately estimate firm and manager fixed effects. The main research question of this Master thesis is how unobservable time-invariant firm and managerial characteristics impact executive compensation. Additionally, the student should try to find out what information these manager fixed effects contain. The student should replicate the findings of the original paper using data from ExecuComp, CRSP, and Compustat. How can we interpret changes in the results when adding fixed effects? Additionally, relate the fixed effects to known manager characteristics, such as a measure for performance. Knowledge on econometric analysis and software (STATA) is required. Introductory Literature: Graham, J. R., Li, S., and Qiu, J. (2012). Managerial attributes and executive compensation. Review of Financial Studies, 25(1), 144-186. Abowd, J. M., Creecy, R. H., and Kramarz, F. (2002), Computing person and firm effects using linked longitudinal employer-employee data (No. 2002-06), Center for Economic Studies, US Census Bureau. 3