Emanuel Zur Directory Page

Prior literature documents that multiple directorships are negatively associated with operating performance due to overly busy directors; however, multiple directorships may also increase firm value because directors gain access to valuable connections, resources, and information through their multiple appointments. This paper examines M&A that terminate target firms’ entire boards as a negative shock to both board busyness and connections at other firms, as a complement to Hauser (2017). We document that firms experiencing a decrease in multiple directorships due to M&A exhibit improved operating performance, monitoring, and strategic advising on average. Firms with the smallest decrease in board connections experience the greatest improvement in operating performance and advising, while firms with the greatest decrease in board connections experience null or negative effects on operating performance and advising. Our findings provide new evidence of the costs and benefits of multiple directorships, depending on the level of board connections.

We study how changes in unemployment risk affect firms’ productivity and whether firm-initiated policies can mitigate the moral hazard problem created by increases in unemployment insurance benefits (UIBs) that might decrease workers’ incentives to work hard. We focus on state-specific changes in UIB levels as a quasi-natural experiment. While a large body of research has examined UIBs, including their effect on unemployed workers, few studies investigate whether UIBs have any impact on a firm’s overall productivity. Using data on firm-level total factor productivity and state-level UIBs, we find a negative association between productivity and UIBs. We also find that the negative association is weaker for firms with higher employee-welfare indices than for firms with lower indices, suggesting that the adverse effect of higher UIBs on productivity is mitigated by policies that benefit workers’ welfare. More specifically, we find that among policies that are under the umbrella of corporate social responsibility, a subset of employee-welfare policies (e.g., work/life benefits) are more effective in managing moral hazard problems than other policies.

This paper examines how disclosures regarding internal controls, required by sections 302 and 404 of the Sarbanes-Oxley Act of 2002 (SOX), affect the market for corporate control. We hypothesize that acquirers with internal control weaknesses (ICWs) make suboptimal acquisition decisions based on poor-quality information generated by their ineffective controls over financial reporting. We expect that such acquirers will be more likely to misestimate the value of their targets or the potential synergies from mergers, thereby overpaying for completed deals. Using a treatment sample of acquisitions made by acquirers that have disclosed ICWs and two matched control samples without ICW disclosures, we document that ICW acquirers experience a substantially more negative market response to acquisition announcements and have lower future performance than the two matched control samples without ICW disclosures. Overall, our results suggest that ineffective internal controls hinder decision making related to mergers and acquisitions (M&A).

In Gantler v. Stephens (2009), the Delaware Supreme Court makes explicit that corporate officers owe the same fiduciary duty to the firm and shareholders as do board members. The decision increased the risk of non-board-serving officers being added as named defendants to investor litigation but did not change the risk of corporate litigation. Analyzing the effect of the Gantler ruling on non-board-serving CFOs, we find a significant change in their behavior as well as in their firms’ disclosure and accounting choices. Specifically, speech tone during earnings calls of non-board-serving CFOs becomes more negative when compared to board-serving CFOs and the firm's CEO, and non-board-serving CFO firms disclose bad news earlier and report more conservatively. Results are stronger for firms incorporated in Delaware. Our findings suggest that CFOs respond to personal litigation risk over and above corporate litigation risk.

We examine the role of target firms’ accounting quality in the merger and acquisition process. We predict that target firm accounting quality will be positively associated with (1) the likelihood that the deal will be structured as a negotiation rather than as an auction, (2) the speed with which the deal reaches final resolution, and (3) the likelihood that the proposed deal is ultimately completed. Our empirical evidence is consistent with these predictions. These results complement and extend existing findings on target firm accounting quality and provide new evidence that financial accounting quality relates positively to the efficient allocation of the economy’s capital resources.

This paper demonstrates a positive effect of stock liquidity on blockholder governance. Liquidity increases the likelihood of block formation. Conditional upon acquiring a stake, liquidity reduces the likelihood that the blockholder governs through voice (intervention)—as shown by the lower propensity for active investment (filing Schedule 13D) than passive investment (filing Schedule 13G). The lower frequency of activism does not reflect the abandonment of governance, but governance through the alternative channel of exit (selling one's shares): A 13G filing leads to positive announcement returns and improvements in operating performance, especially in liquid firms. Moreover, taking into account the increase in block formation, liquidity has an unconditional positive effect on voice as well as exit. We use decimalization as an exogenous shock to liquidity to identify causal effects.

In contrast to previous studies documenting positive abnormal returns to target shareholders, we find that hedge fund activism significantly reduces bondholders' wealth. The average excess bond return is −3.9% around the initial 13D filing, and is an additional −4.5% over the remaining year. Excess bond returns are related inversely to subsequent changes in cash and assets (loss of collateral effects) and directly to changes in total debt. Confrontational campaigns and the acquisition of at least one seat on the target's board elicit more negative bond returns. We also find an expropriation of wealth from the bondholder to the shareholder.

We examine recent confrontational activism campaigns by hedge funds and other private investors. The main parallels between the groups are a significantly positive market reaction for the target firm around the initial Schedule 13D filing date, significantly positive returns over the subsequent year, and the activist's high success rate in achieving its original objective. Further, both activists frequently gain board representation through real or threatened proxy solicitations. Two major differences are that hedge funds target more profitable firms than other activists, and hedge funds address cash flow agency costs whereas other private investors change the target's investment strategies.