Sunwoo Hwang

Working Papers

Labor-Management Relational Capital with Biwon Lee

• Abstract: Using novel data from surveys on randomly selected establishments, which include common questions for employees and management about their relationship, we show that good labor-management relations positively affect profitability, labor productivity, and employee retention. We measure relational quality by comparing employee responses to management's and exploit its within-stratum-year variation, which is random conditional on covariate balance, to predict outcomes for the following survey year. Neither employee nor management responses alone predict outcomes, implying the significance of evaluating a bilateral ESG factor based on input from both parties involved. The results are driven by the cultural aspect of relational quality. They are more pronounced among establishments with lower relational quality, those offering job training to rank-and-file employees, and those comprising private firms. 

Indirect Employment and Innovation

• Abstract: Using novel indirect employment data and a Supreme Court ruling against subcontracted employment, I show that the indirect employment of skilled labor reduces innovation. Following the ruling, which leads to integration between labor (of subcontracted workers) and capital (of their users), establishments with a higher pre-ruling reliance on subcontracted workers innovate more post-ruling compared to those with a lesser reliance. This finding is conditional on compensation schemes rewarding employees for their investment in firm-specific skills and long-term performance, is attributed to collaborations with existing inventor employees, and is not accompanied by simultaneous rises in operating leverage, R&D expenditure, or capital intensity. 

• 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

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

• 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

Media

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