Sunwoo Hwang

Working Papers

Labor-Management Relational Capital with Biwon Lee

• Abstract: Using novel data from surveys on randomly selected establishments, which ask common questions to employees and management about their relationship, we show that labor-management relational quality enhances profitability, labor productivity, and retention. We define relational quality based on the distance of numerical answers of employees from those of management. We exploit within-stratum-year variation in relational quality, which is random, to predict outcomes in the next survey year. Neither answers of employees nor management predict outcomes, implying the significance of evaluating bilateral ESG factors bilaterally. The results are driven by the cultural dimension of relational quality and establishments that provide job training to rank-and-file employees. 

Contingent Employment and Innovation

• Abstract: Using novel indirect employment data and a Supreme Court ruling against subcontracted employment, I show that contingent employment of skilled labor reduces innovation. Innovation rises post-ruling for establishments that used more subcontracted workers compared to establishments that used less. The finding is without a simultaneous increase in operating leverage, R&D, and capital intensity and conditional on compensation schemes that reward employees for their investment in firm-specific skills and long-term performance. The increase in innovation is yet primarily through collaborations with existing inventor employees, who also create more non-collaborative patents. 

• Featured in University of Cambridge Judge Business School's News & Insight (Link) 

Mandating Women on Boards: Evidence from the United States with Anil Shivdasani and Elena Simintzi 

• Abstract: On September 30, 2018, California became the first U.S. state to set quotas for women directors on corporate boards. The law resulted in a decline in shareholder value for firms headquartered in California. This decline increases with the number of female directors required to be added under these quotas. We find evidence that supply-side constraints drive the announcement effects. The law expanded the supply of women in the director pool. Female directors appointed to meet the quotas are as skilled as male directors, but possess a less similar set of skills and are given fewer responsibilities on the board.

• Featured in Harvard Law School's Forum on Corporate Governance and Financial Regulation (Link) 

Revealed Board Non-Independence

• Abstract: Decades of research on corporate boards have wrestled with the issue that board composition is endogenously determined by the CEO and a board and relays incomplete information about board independence. This paper establishes that there exist circumstances under which the CEO reveals the private information she has made a board non-independent and that her decision constitutes perfect Bayesian equilibria. Further, the paper shows that the revelation is followed by a sharp decline in firm value and board monitoring quality. The results are stronger for firms in a poor information environment. Tests based on sudden director deaths suggest the evidence is causal.

Publications

Does Diversification of Share Classes Increase Firm Value?  with Sojung Kim and Woochan Kim, 2020, Asian Review of Financial Research

When Heirs Become Major Shareholders: Evidence on Pyramiding Financed by Related-Party Sales with Woochan Kim, 2016, Journal of Corporate Finance

Managerial Entrenchment of Anti-Takeover Devices: Quasi-Experimental Evidence from Korea with Woochan Kim, 2012, Pacific-Basin Finance Journal

Teaching 

Korea University Business School

• Financial Management (undergraduate), Spring 2021, Fall 2021, Fall 2022 

• Corporate Finance (undergraduate), Fall 2021, Fall 2022, Spring 2023

• Corporate Finance I (graduate), Fall 2023

• Entrepreneurial Finance (KMBA special lecture), Winter 2023

• Seminar in Finance (graduate), Fall 2021, Spring 2022, Fall 2023

University of North Carolina at Chapel Hill, Kenan-Flagler Business School

• Corporate Finance (undergraduate), Summer 2017

Writings

The Rise of the Special Purpose Acquisition Company (Link)