Working Papers

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 no reduction in output and no increase in labor or capital inputs. It is more pronounced in establishments where innovation incentives complement 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: Using novel survey data from randomly selected establishments, which include common questions posed to employees and management about their relationship, we show that good labor relations enhance profitability, labor productivity, and employee retention. We measure relational quality by comparing employee responses to those of management and leverage its within-stratum-year variation, which is random conditional on covariate and outcome balances, to predict outcomes in the following survey year. Neither employee nor management responses alone predict outcomes, implying the importance of assessing bilateral ESG factors, such as labor relations, with input from both parties. The results are pronounced in establishments with lower relational quality and those offering job training to rank-and-file employees. 

Indirect Employment and Innovation

• Abstract: Using novel data on indirect employment (IE) and a Supreme Court ruling against it, I show that IE of skilled labor reduces corporate innovation. After the ruling-induced integration of indirectly hired skilled workers into the boundaries of their users, establishments with greater pre-ruling reliance on these workers innovate more compared to those with lesser reliance. This effect is conditional on compensation schemes that reward employees' investment in firm-specific skills and long-term performance. It is attributed to the support provided by former indirect employees to existing inventors and occurs without increased R&D spending or capital intensity thanks to low integration costs.

• 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, syllabus), Fall 2021, Fall 2022, Spring 2023, Fall 2024, Spring 2025 (scheduled)

• Corporate Finance Theory (graduate, syllabus), Fall 2023, Fall 2024

• Entrepreneurial Finance (KMBA special lecture), Winter 2023

• Seminar in Finance (graduate), Fall 2021, Spring 2022, Fall 2023, Spring 2024, Fall 2024

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

Media

"South Korea has had enough of being called an emerging market," Economist, June 2023