B9329 001 Empirical Corporate Finance PhD Fall 2018 Syllabus Email xavier giroud gsb columbia edu Office Uris 806 Professor Xavier Giroud Instructor Contact Class time Thursdays 8 00am 11 15am Location Uris 329 1 Course Description This course provides an introduction to empirical research in corporate finance with an emphasis on the application of cross sectional and panel data econometric techniques for causal inference The objective of this course is threefold First this course will provide participants with a toolbox and working knowledge of the empirical methods used in corporate finance This is an applied course not a theory course Accordingly I will teach you how to use each tool properly not how to derive its asymptotic properties Second participants will become familiar with the literature in empirical corporate finance The goal is to provide broad but not comprehensive coverage of the literature identify recurrent themes and outline potential areas of future research Third participants will learn to become sophisticated consumers and eventually producers of state of the art empirical research in corporate finance that applies cross sectional and panel data econometric techniques 1 2 Course Structure The course is structured in two parts The first part classes 2 4 will focus on the empirical methods used in corporate finance research with an emphasis on i instrumental variables IV ii difference in differences DID and iii regression discontinuity designs RDD and illustrate these methods with examples from the corporate governance literature In the second part classes 5 9 we will discuss the recent literature in several areas of corporate finance building on the knowledge from the first part 3 Course Requirements Your grade for the course will consist of four components Replication assignment 25 Final exam 40 Class participation 10 Replication assignment Participants will replicate the results of an existing paper You will be asked to download the necessary data and conduct the econometric analysis to achieve similar results to the ones in the paper The objective of this assignment is to learn how to use the tools covered in the first part of the course it is one thing to learn about difference in differences estimation yet it is another thing to actually estimate one More details on this assignment will be posted on the course website In class presentation 25 In class presentation Each participant will present an academic article from the reading list The purpose of this assignment is twofold i presentations are one key way people in academia will get to know and assess you so it is a good idea to get some practice now ii this will help you better understand and think critically about the empirical tools discussed in the first part of the course Final exam The final exam will be administered in the final class Class participation Several academic articles will be assigned as required readings Participants are expected to read these articles before class and be ready to contribute to the corresponding class discussion 2 4 Course Outline and Reading List This course is based on academic articles Required readings are marked with a Note that I have assigned several of my own papers This will allow me to share insights into i the making of a paper from the first draft to the published version and ii the reviewing process In addition we will use the following two econometric references the relevant chapters pertaining to each class are indicated in the reading list Angrist Joshua and Joern Steffen Pischke 2009 Mostly Harmless Econometrics An Empiricist s Companion Princeton University Press Princeton NJ Roberts Michael R and Toni M Whited 2013 Endogeneity in empirical corporate finance in Constantinides George Milton Harris and Rene Stulz eds Handbook of the Economics of Finance volume 2 493 572 Elsevier North Holland Oxford and Amsterdam Class 1 Readings Introduction to empirical corporate finance Angrist and Pischke Chapters 1 and 2 Roberts and Whited Chapters 1 and 2 Class 2 Corporate governance I Method Difference in differences DID Readings Bertrand Marianne and Sendhil Mullainathan 2003 Enjoying the quiet life Corporate governance and managerial preferences Journal of Political Economy 111 1043 1075 Agrawal Ashwini 2013 The impact of investor protection law on corporate policy and performance Evidence from the blue sky laws Journal of Financial Economics 107 417 435 Bertrand Marianne and Sendhil Mullainathan 1999 Is there discretion in wage setting A test using takeover legislation Rand Journal of Economics 30 535 554 Giroud Xavier and Holger M Mueller 2010 Does corporate governance matter in competitive industries Journal of Financial Economics 95 312 331 Gormley Todd and David Matsa 2016 Playing it safe Managerial preferences risk and agency conflicts Journal of Financial Economics 122 431 455 3 Econometrics Angrist and Pischke Chapter 5 Roberts and Whited Chapter 4 Bertrand Marianne Esther Duflo and Sendhil Mullainathan 2004 How much should we trust differences in differences estimates Quarterly Journal of Economics 119 249 275 Gormley Todd and David Matsa 2014 Common errors How to and not to control for unobserved heterogeneity Review of Financial Studies 27 617 661 Petersen Mitchell 2009 Estimating standard errors in finance panel data sets Comparing approaches Review of Financial Studies 22 435 480 Class 3 Corporate governance II Method Regression Discontinuity Design RDD Readings Cu at Vicente Mireia Gin and Maria Guadalupe 2012 The vote is cast The effect of corporate governance on shareholder value Journal of Finance 67 1943 1977 Cu at Vicente Mireia Gin and Maria Guadalupe 2015 Say pays Shareholder voice and firm performance Review of Finance 20 1799 1834 Flammer Caroline 2015 Does corporate social responsibility lead to superior financial performance A regression discontinuity approach Management Science 61 2549 2568 Flammer Caroline and Pratima Bansal 2017 Does a long term orientation create value Evidence from a regression discontinuity Strategic Management Journal 38 1827 1847 Econometrics Angrist and Pischke Chapter 6 Roberts and Whited Chapter 5 Lee David S and Thomas Lemieux 2010 Regression discontinuity designs in economics Journal of Economic Literature 48 281 355 Class 4 Corporate governance III Method Instrumental variables Readings Bennedsen Morten Kasper M Nielsen Francisco Perez Gonzalez and Daniel Wolfenzon 2007 Inside the family firm The role