Faculty of Business Brown Bag Seminar - Finance - Asst. Prof. Özlem Akın

Faculty of Business Brown Bag Seminar | Finance | Özlem Akın

Date: Friday, March 22, 2024
Time: 13:00-14:30
Location: AB2 345


Speaker: Özlem Akın - Özyeğin University
Ozlem Hoca will present us her joint work with Christian Fons-Rosen (University of California at Merced). 


Title: Manager Disagreement and Corporate Investments


Abstract: We empirically examine the effect of disagreement among corporate managers on key corporate decisions such as capital investment expenditures. We use data for all listed firms in US for the period of 1986-2019. This paper first constructs a measure of disagreement among the managers utilizing insider trading data. Then we document a negative relationship between the manager disagreement level and capital investment indicating that disagreement among managers affects key corporate decisions. Finally, we investigate the nature of this relation during times of high uncertainty. Using economic policy uncertainty index developed by Baker et al. (2016) we show that in times of uncertainty disagreement among managers contributes to the drop in investments which leads to deepening the negative effects of uncertainty on the real economy. Our results help to understand how boards take decisions and the mechanism behind the observed effects of economic policy uncertainty on the real economy.