R. (Renjie (Rex)) Wang MSc

1 Background
In the United States (U.S.), managers usually own very little of the rms they manage and therefore may pursue their private benets rather than maximize shareholder value (Jensen and Meckling,
1976; Jensen, 1986; Shleifer and Vishny, 1989). The resulting agency problems can impair corporate performance and destroy shareholder value, and therefore we need corporate governance mechanisms
to keep a tight rein on managerial behavior. Yet, existing literature has nevertheless found abundant evidence of dysfunctional corporate governance, from managerial slack (e.g. Bertrand and Mullainathan (2003)) to corporate fraud (e.g. Kedia and Philippon (2009)) and from board failure (e.g. Bebchuk and Cohen (2005)) to outrageous executive compensation without performance (e.g. Bebchuk and Fried (2003)). On the other hand, there are also many studies documenting
evidence advocating the success of corporate governance (e.g. Shleifer and Vishny (1997); Gillan and Starks (2007); Brav et al. (2010)). Along the lines of this strand of literature, my PhD project will provide empirical evidence on the impact of corporate governance on corporate nancing decisions and performance, contributing to the longstanding debate about the eectiveness of corporate governance. More specically, I plan to conduct the following studies:

1. Location and managerial entrenchment: Geographic distance aects the information costs of shareholders, thereby infuencing shareholders' ability to monitor and oversee management. Are managers at remote rms therefore more entrenched than those at centrally located rms? And how does this managerial entrenchment aect corporate investment decisions?

2. Geographic proximity and hedge fund activism: Do geographic proximity between hedge fund activists and their targets reduce information costs and coordination frictions, facilitating the success of the shareholder activism at target companies? 3. Convertibles and hedge funds as entrenchment nancing: In private placements, managers can basically choose investors from whom they wish to obtain nancing. Do entrenched managers who wish to avoid monitoring and stay entrenched choose to issue their (convertible) securities to a larger number of investors for dispersed ownership, as well as to hedge funds who only want to hedge their positions and have no interest in corporate governance?