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Horstmeyer, D. (2019), ''Beyond Independence: CEO Influence and the Internal Operations of the Board,” Quarterly Journal of Finance (2), 1-40.
Abstract: Using a detailed dataset on the meeting sub-structure of the board, this paper investigates the time trends and cross-sectional determinants of internal boardroom control. First, I document that the principal governance reform following Sarbanes-Oxley was the removal of the CEO as a participating member in board monitoring and investment decisions. Consistent with this being against the preferences of the CEO, I find that CEO power is negatively related to monitoring work handled outside of the CEO’s presence and positively related to board-time spent in the executive committee. Together the results highlight internal operations as governance concerns of the modern board.
Horstmeyer, D., K. Wells (2020), ''When Do Governance Mechanisms Matter Most?'' Quarterly Journal of Finance (1), 1-52.
Abstract: We examine the interaction of internal and external firm-level governance mechanisms with industry-specific economic conditions to assess when they best serve current shareholders. We find that external governance (shareholder rights) is most valuable during industry upturns, with no differential benefit during downturns. For internal governance, we find that small boards are incrementally more valuable during upturns but that this result weakens/reverses during downturns, and inconclusive evidence regarding the state dependent value of institutional ownership. Contributions include showing: governance mechanisms have industry economic state dependent values; small boards may not always be optimal; and managers do not capture these inefficiencies through aggressive policy decisions, nor excessive compensation.
Horstmeyer, D. (2019), ''Formation of a Student Managed Investment Fund: Risk Management and Oversight,” 2019. Managerial Finance (45), 1-12.
Abstract: The creation and formation of a Student Managed Investment Fund (SMIF) is a risky proposition for all stakeholders involved in the process. These risks include reputational risks for the individuals involved, fiduciary risks for the school’s Board of Trustees, and monetary risks for the university itself. This paper serves to explain and detail how these risks can be mitigated through specific oversight committee construction, distributional/benchmarking requirements for the fund, and detailed trading rules (exit points, short sale constraints, loss provisions, etc) for fund managers, which can all be codified in the bylaws of the SMIF.
Horstmeyer, D. (2018), ''The Career Consequences of Being a Dissident Director'' (R&R at JFQA)
Abstract: This paper explores the career consequences of the decision to ally oneself with an activist investor/hedge fund in a proxy contest. Using 102 observations where an existing director reveals themselves to be a ‘dissident director’ (i.e. agrees to help an activist in a proxy contest against an unrelated firm), I find weak evidence over the 2011-2015 time period that such a decision results in a loss of board seats or lower director compensation. Yet, over the earlier time period of 2006-2010, evidence persists of negative career consequences to the dissident director. The directors who suffer a loss in board seats over this period come from firms with high CEO ownership, more entrenched directors, and fewer women on the board. Similar results persist for CEOs/officers who reveal themselves to be dissident directors. In total the results highlight the changing cultural attitudes within the board to activist interventions and yield strong implications for the costs associated with firm-level governance reform.
Horstmeyer, D. (2019), ''2nd and 1: What Should be the Most Valuable Play in Football" (R&R at the Journal of Sports Analytics)
Abstract: Embedded in the game of football is the ability to ‘reset the chains’ by moving the ball 10 yards or more in four attempts. This option to reset the chains creates a very valuable opportunity for teams to ramp up or down the risk of their play calls based on their distance from the first down marker and how many downs they have left. Analyzing data over the past six years of all play calls in the NFL highlights that on the whole NFL teams are not making use of this embedded option, and are actually playing more conservatively at points where they should be increasing the risk of their play call, namely when facing 2nd and short opportunities. This finding is confirmed by detailing that offensive teams which deviate from this trend and actually increase the range of play calling when facing 2nd and short, score marginally more points, especially when at positions on the field where the value of this option is greatest.
