Research
Academic and industry research by Analytica advisory board members
Chung, Chune Young
The Effect of Shale Gas Booms on Environmental CSR Activity
Using staggered shale gas developments across US counties from 2000 to 2013, this study finds that firms headquartered in shale gas boom counties significantly increase their environmental CSR relative to firms in non-boom counties. The effect is stronger for firms with higher litigation risk, greater stakeholder interactions, and longer investment horizons — and the environmental CSR driven by the shale boom is associated with subsequent improvements in firm value.
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Kim Donghyun
Risk Management Transparency and Compensation
Using FAS 133 — a 1998 accounting standard that forced fair-value disclosure of all derivative instruments — as a natural experiment, this paper shows that improved risk management transparency allows shareholders to award significantly more convex compensation (stock options) to financial officers who oversee derivatives programs. The pay convexity gap between derivative-using and non-using firms widens by $4,457 after FAS 133, equivalent to 147% of the pre-reform gap, concentrated in firms with weaker board monitoring and more influential financial officers.
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Shareholder Litigation Rights and Corporate Acquisitions
Using the 1999 Ninth Circuit Court of Appeals ruling as an exogenous shock to shareholder litigation rights, this paper finds that acquirers in affected states experienced 1.32 percentage points lower announcement returns — driven by managers pursuing larger, equity-financed empire-building acquisitions with inflated earnings guidance. Value destruction is concentrated in firms with weak internal governance, confirming shareholder litigation as a critical external governance mechanism.
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Do Bureaucrat-Background Outside Directors Contribute to Firms? Evidence from Korean Financial Companies
Using 515 firm-year observations from Korean financial companies (2011–2015), this study examines whether outside directors with government bureaucrat or financial public institution backgrounds — commonly referred to as "parachute appointments" — improve firm performance and value. The findings show that these directors do not generate superior ROE, ROA, or Tobin's Q, and raise fundamental questions about the effectiveness of Korea's outside director system in the financial sector.
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Daniel Sungyeon Kim
Performance Share Plans: Valuation and Empirical Tests
Performance share plans now represent 14% of total CEO compensation at S&P 500 firms and have overtaken stock options in prevalence, yet their fair value remains poorly measured. This paper derives closed-form valuation formulas under three distributional assumptions and finds they outperform reported and heuristic values for EPS-based plans when analyst consensus forecasts are used — with direct implications for FASB disclosure policy.
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