I am an Assistant Professor of Finance at Korea University Business School (KUBS). My research interests lie in the areas of corporate finance, which include labor finance, entrepreneurial finance, and environment, social, and governance (ESG).
Email: sunwoo_hwang(at)korea.ac.kr
I co-organize the K virtual finance seminar (link).
Gray Boards: Revealed Board Non-Independence
Abstract: How do investors learn about de facto board non-independence when formal majority independence is close to universal? I develop a signaling model in which the first overt non-independent appointment is a last-resort action that reveals depleted concealment options, and in which a proxy-advisor classification layer surfaces conflicts that firm disclosure leaves inside the independent block. In S&P 1500 firms after Sarbanes-Oxley, the first move from zero gray directors to a positive number is associated with a 4% decline in Tobin's Q; additional gray appointments have no incremental effect. In sudden deaths of independent directors, the stock-price reaction is about one percentage point less negative on gray boards, with within-director comparisons pointing in the same direction. The first-gray effect is larger in poorer information environments, and gray boards are associated with weaker CEO equity incentives and lower CEO turnover-performance sensitivity.
Risk Management with Inventory Buybacks with Sung Kwan Lee
Abstract: We study buyback clauses as an operational hedge against demand risk. Using Korean value-added tax invoices from 2017Q1–2021Q4, we identify buyback relationships as supplier–customer dyads with pre-COVID reciprocal flows. Although only 4.2% of active dyads exhibit such flows, they mediate 46.9% of B2B sales and link nearly half of firms. In an entropy-balanced difference-in-differences design around COVID-19 with dyad and firm-by-year fixed effects, customer-to-supplier sales rise by 10.4% and supplier-to-customer sales fall by 3.7%, consistent with customers exercising the return option. Suppliers redeploy returned goods to other buyers. Buybacks form via capacity–need matching and are honored by high-capacity suppliers.
Time to Innovate with Sooji Kim
Abstract: We leverage Korea's 52-hour workweek law and a regression discontinuity design to show the positive impact of reduced labor time on corporate innovation. Effective July 2018, the law leads to an immediate fall in working hours and a rise in innovation output by the end of 2019, only in light manufacturing, a sector heavily reliant on labor-driven innovation. This effect is attributed to suboptimal pre-law time allocation, as evidenced by the lack of significant changes in output, labor input, and capital input. It is more pronounced in establishments where innovation incentives complement increased non-labor time and less so in those where other forms of slack serve as substitutes. The pre-law suboptimality is explained by structural inertia and not by agency conflicts.
Labor-Management Relational Capital with Biwon Lee
Abstract: We study labor-management relational capital as a sub-component of corporate culture. Using matched employee-manager survey responses on key relational dimensions to measure an interpretation wedge between the two groups and the survey’s random-sampling design for identification, we find that establishments where employees view relations more favorably than managers subsequently achieve higher profitability, labor productivity, and employee retention. Neither employees’ nor managers’ assessments alone predict these outcomes. The predictive content resides in wedges in relational culture, not in gaps in formal policies or observed disputes, consistent with an interpretation-based theory of relational contracts.
The Innovation Cost of Indirect Employment
Abstract: I study how staffing skilled roles via contractors or agencies shapes innovation. Exploiting a Supreme Court ruling that led firms to convert contractors into permanent employees, I show that establishments with greater pre-ruling reliance on skilled contractors experience greater post-integration increases in innovation than those with lesser reliance. Gains emerge where compensation already rewards firm-specific skill acquisition and long-term performance. Job security alone delivers little. Innovation rises without increases in R&D spending or capital intensity, pointing to an incentive channel. Newly regularized workers amplify the productivity of incumbent inventors. These results underscore a trade-off between labor flexibility and innovation.
Featured in the 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)
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
Korea University Business School
Financial Management (undergraduate), 2021-Present
Corporate Finance (undergraduate, syllabus), 2021-Present
Corporate Finance I (graduate, syllabus), 2023-Present
Independent Research (Finance MBA), 2023-Present
Seminar in Finance (graduate), 2021-2024
Entrepreneurial Finance (KMBA special lecture), Winter 2023
University of North Carolina at Chapel Hill, Kenan-Flagler Business School
Corporate Finance (undergraduate), Summer 2017
"South Korea has had enough of being called an emerging market," Economist, June 2023