Assoc Prof Mia Pham

This paper examines how financial market participants incorporate corporate culture, an important value-relevant information, into their investment decisions. Utilizing firm-level corporate culture measures derived from the earnings conference call transcripts, we find that firms with stronger cultural values are associated with higher stock liquidity. We identify three channels through which corporate culture affects stock liquidity: reducing information risk, enhancing trust, and increasing investor recognition. In addition, we find that stronger corporate culture is significantly associated with higher stock price informativeness and future stock returns, and lower level of default risk and informed trading. Overall, our findings highlight the importance of corporate culture in enhancing financial market quality.

Employing firm-level work from home (WFH) suitability derived from the U.S. universe job postings, we investigate whether rating agencies and debt holders incorporate WFH suitability in their risk assessments. We document that firms with higher WFH suitability have higher credit ratings and lower costs of debt. Our results are robust to different fixed effect estimations, sampling methods, and controls. We identify two ways that WFH suitability translates into higher credit ratings: high WFH suitability is associated with lower future cash flow volatility and lower default risk. Overall, our study suggests that WFH suitability is an important determinant of credit risk assessments and that firms should see flexible work arrangements as an effective strategy in their crisis management planning.

This study examines whether regional gambling attitudes influence financial advisor misconduct in the United States. Using a sample of more than 2.5 million advisor¿year observations, we find that financial advisors and financial advisory firms operating in areas with high local gambling preferences are more likely to engage in misconduct. In-depth analyses at both the individual and firm levels, employing alternative measures of local gambling preference, different estimation models and instrumental variable approaches, confirm this finding. Our findings shed light on the role of regional gambling in shaping unethical financial conduct, offering valuable insights for practitioners and regulators.

Motivated by the increasing economic significance of investment advisory industries and the prevalence of wrongdoing in financial planning services, we examine whether, and to what extent, employee misconduct is shaped by their local corruption culture. Using novel data of more than 4.7 million adviser-year observations of financial advisers and the Department of Justice's data on corruption, we find that financial advisers and advisory firms located in areas with higher levels of corruption are more likely to commit misconduct. These results hold for both individual advisor and firm level analyses and are robust to the use of various fixed effects, model specifications, proxies for corruption and misconduct, and an instrumental variable approach. Using the passage of the Dodd-Frank Whistleblower Provision, which provides incentives for reporting corruption incidences and thereby reduces the incentives for fraud, we find that the relation between local corruption culture and adviser misconduct is attenuated after the provision enacted by the SEC. Overall, our study highlights the externalities of corruption culture on individual ethics and the essential role of whistleblowing laws in reducing corruption-prone norms.

This study explores the survival of firms across countries, and what factors contribute to their ability to withstand large-scale exogenous shocks, focusing on the COVID-19 pandemic. Using corporate default risk as a measure of non-resilience, our empirical results from 97 countries reveal that stringent COVID-19 containment measures created a significant resilience test for businesses worldwide. Further tests suggest that cash holdings, knowledge assets, international sales, and access to foreign capital markets are crucial for global businesses to pull through exogenous shocks. Country-level institutional qualities also play an essential role in shaping business resilience during a crisis. Our study is the first to comprehensively analyze the drivers of business resilience across diverse countries using the COVID-19 outbreak as a major global crisis, providing a nuanced understanding of this topic in international business.

We study whether firms that are led by chief executive officers (CEOs) with law degrees (lawyer CEOs) have different credit ratings and costs of debt from other firms. Our sample consists of Standard & Poor's 1500 firms from 1992 to 2020, 9.2% of which have lawyer CEOs. We find that these firms have better credit ratings, compared to other firms. On average, their cost of debt is 10% lower than that of firms led by CEOs without legal backgrounds. Our results are robust to different specifications, sampling methods, and controls, such as firm and CEO characteristics. We identify two ways that CEO expertise translates into higher credit ratings: lawyer CEOs are associated with a lower future volatility of stock returns and a reduction in information risk. The decreased business risk and better financial reporting are associated with 5% lower auditing fees for firms with lawyer CEOs.

The Coronavirus crisis has led to unprecedented economic shocks to the corporate world and challenged how corporate management contributes to business resilience amid the pandemic. Employing a novel measure of managerial ability constructed for a large sample of U.S. publicly listed firms, we document that firms led by higher managerial ability exhibit lower stock return volatility, higher operating performance, and lower levels of default risk amid the pandemic. A difference-in-differences analysis suggests that the impact of managerial ability on firm performance is stronger during the pandemic than during the pre-pandemic period. The effect of managerial competency on corporate resiliency is more pronounced among firms that have high exposure to COVID-19. In addition, firms led by high managerial competency management are associated with higher stock liquidity and are less likely to exhibit employment, healthcare, safety, and consumer protection related violations amid the pandemic.

This paper examines the relation between gender differences in entrepreneurship and firm-level bribery, one of the most impactful business obstacles to private sector growth. Using data from a comprehensive survey covering 16,560 enterprises in 32 emerging economies, we find that female-led firms account for 19.2% of all enterprises, which is approximately 4 times lower than the share of male-led firms, and that female entrepreneurs experience a higher level of bribery than their peers. The impact of gender on bribery is more pronounced among firms located in countries that are more corruption-prone and becomes weaker among countries with a higher female graduation ratio at the tertiary level. In addition, female-run firms have a lower likelihood of obtaining a construction permit, securing a government contract, or holding an operating licence. Overall, the results suggest that a bribe-to-survive motive is a possible explanation for the higher level of bribery among female-led firms in emerging markets.

Air pollution is one of the most serious environmental risks and imposes multi-dimensional externalities. This paper examines the impact of air pollution on the efficiency of financial markets. Using a comprehensive set of market anomalies and a composite mispricing score constructed based on all anomalies, we find that stock market anomalies are stronger following severe pollution periods. We document a reduction in air pollution and anomalous returns following months when more attention has been paid toward air pollution. We also find an improvement in air quality reduces anomalous returns. Overall, the results are consistent with the hypothesis that cognitive impairment is a channel through which air pollution accelerates behavioral biases in the financial markets.

This paper examines the relation between investor attention and stock market anomalies in the US stock market. We find anomalies are stronger following high rather than low attention periods. Returns on the long¿short strategy based on a composite mispricing score during high attention months are 2.25 times higher than those during low attention periods. The results are consistent with the notion that high levels of attention can exacerbate investor overreaction to irrelevant information. Mispricing is then corrected, leading to increased anomaly returns following high attention periods.

I find that about 8.5% of firms in the sample of S&P 1500 firms are run by CEOs with a law degree (lawyer CEOs) and these firms have higher stock market liquidity than non-lawyer run CEO firms. I also find stock market liquidity improves following the appointment of lawyer CEOs. Lawyer CEOs improve stock market liquidity because they improve the firm's information environment and reduce firm risk. Firms led by CEOs with legal expertise are associated with less stock price delay, weaker market reactions to corporate earnings announcements, and lower insider trading profits. Overall, this paper highlights the importance of CEO characteristics in enhancing financial market quality.