Topic:

Information Complementarities and the Dynamics of Transparency Shock Spillovers

Time&Date: 

13:00-14:30, 2020/10/9 (Friday)

Speaker:

Prof. Sudipto Dasgupta  (The Chinese University of Hong Kong)

Abstract:

We show that information complementarities play an important role in the spillover of transparency shocks. We exploit staggered revelation of financial misconduct by high-profile firms and find that the implied cost of capital increases for “close” industry peers relative to “distant” peers. The effect is particularly strong when the close peers share common analysts and institutional ownership with the fraudulent firm. Disclosure also increases, especially for firms with co-coverage and co-ownership. While disclosure continues to increase, the cost of equity subsequently decreases. Firms’ financing patterns tilt more towards debt financing initially at the expense of equity, but eventually revert.

Bio:

Prof. Sudipto Dasgupta is currently a Professor at the Department of Finance at The Chinese University of Hong Kong. He previously held academic positions at Lancaster University, The Hong Kong University of Science and Technology, The Jawaharlal Nehru University, The Indian Statistical Institute, and The University of Southern California. He has been the Managing Editor of the International Review of Finance since 2008 and is a Senior Fellow of the Centre for Economic Policy Research (CEPR) and the Asian Bureau of Finance and Economics Research (ABFER).

Prof. Dasgupta has broad research interests with a focus on Corporate Finance. His more recent work includes papers based on empirical methodology and he has examined such issues as the capital structure policy of firms, the effect of financial constraints on firm behaviour, including inventory investment and the allocation of cash among alternative uses, the reputational effects of large customer accounts on the loan spreads of supplier firms, whether the managerial labor market rewards top executives for their perceived ability, whether more intense product market competition increases firm efficiency by accelerating the replacement of less efficient managers, and so on.