Seungjoon (Joon) Oh. Education

Transcription

1 Education Seungjoon (Joon) Oh Stephen M., 701 Tappan Street, Ann Arbor, MI Tel: (608) , Stephen M present Ph.D. Candidate in Finance, Proposal Defended (Jun, 2013) Committee:Amy Dittmar(Chair), Nejat Seyhun, Amiyatosh Purnanandam, Jeffrey Smith, Jagadeesh Sivadasan Korea Advanced Institute of Science and Technology (KAIST) Bachelor of Science in Industrial Engineering, Summa cum Laude Research Interests Corporate Finance, Real Estate Finance, and Macroeconomics Working Papers Fire-Sale Acquisitions and Intra-Industry Contagion, Job Market Paper, Nov 2013 Abstract: This paper investigates how the combined effects of target firm- and industry-level distress affect acquisition outcomes through the fire-sale channel. I show that distressed targets are sold at discounts when the target industry is in distress. Consistent with the Shleifer and Vishny model, the fire-sale effects cause distressed targets to be sold to industry outsiders and acquirers to gain higher return by exploiting target s weakened bargaining power. I further demonstrate the fire-sale effects in acquisitions by showing that these findings are stronger for targets with acquirers that are in different industries or where targets have high industry asset-specificity: high capital-specificity, strong labor union, or high R&D intensity. The results are robust to controlling for the effect of stock market undervaluation and economic recession. I then examine the contagion effects of fire-sale acquisitions on target rivals in the same industry. I find that rivals earn -0.9% abnormal returns at the announcement due to negative information from fire-sale acquisitions. Overall, the results show that the fire-sale discount in distressed target acquisitions is an important determinant of financial distress costs of a firm and contributes to industry-specific contagion of economic shocks. - Presented: Department Seminar (Mar and Oct, 2013), 39th Eastern Economic Association Annual Conference, 2013 FMA Doctoral Consortium and Job Market Paper Sessions, Yonsei University, Korea Insurance Research Institute, 2014 Eastern Finance Association (Scheduled) Recourse Mortgage Law and Asset Substitution: Evidence from the Housing Bubble, with Tong Yob Nam, Aug 2013 Abstract: In a state with non-recourse mortgage law, borrowers have limited liability on their mortgage loans. This paper tests whether state-level variation in recourse mortgage laws affects housing prices and mortgage lending. Using the difference-in-difference framework with the mortgage market collapse in 2007 as an exogenous shock, we find that non-recourse law results in larger bubbles in housing prices. To identify the causal effects of recourse law on housing prices, we compare housing 1

2 prices in contiguous border county-pairs in the United States and examine discontinuities at state borders. We then document speculative investment behavior of households in non-recourse states by showing their higher leverage decisions and greater allocation of wealth to housing assets. We also explore whether mortgage lending behavior in non-recourse states reflects anticipation of additional risk. We find that mortgage interest rate and loan denial rate are higher in non-recourse states, which suggests that lenders are aware of additional risk in non-recourse loans. However, we find that because the emergence of the originate-to-distribute (OTD) market on the housing markets enables lenders to effectively shift the risks to other investors, the mortgage lending behavior does not fully reflect the higher risk. The higher ratio of sub-prime loans in non-recourse states and the positive interaction effect with non-recourse law on housing price growth support our hypothesized two-stage risk-shifting mechanism in the recent housing bubble. - Presented: 2013 FMA Doctoral Consortium, 26th Australasian Finance and Banking Conference(*), 2014 Eastern Finance Association (Scheduled) Economic Growth and Labor Market Institutions in East Asian Structural Transformation, with Seung-Gyu (Andrew) Sim Dec 2013, Submitted (Under Review) Abstract: This paper develops a new growth model by incorporating labor market friction and human capital accumulation into the multi-sector growth framework to analyze the underlying link between economic growth and labor market institutions in a transitional economy. The model, calibrated based on the Japanese and South Korean structural transformation episodes, demonstrates that lifetime employment (and the implied lengthy job tenure) has contributed to endogenous formation of a Ricardian comparative advantage in non-agricultural sector, by enhancing specific human capital accumulation and facilitating investment. It has enabled Japan and South Korea to achieve unprecedentedly rapid economic growth. The counterfactual experiment finds that had the job durations of a typical worker been 1 year (roughly one tenth of the actual average job duration) for in the Japanese labor market and in the Korean labor market, the non-agricultural GDP per capita in 1990 would have accounted for 71 and 76 percent of the actual values, respectively. -Presented: 2013 ASSA/KAEA Meeting Workshop (San Diego), University of Tokyo(*), Japan National Graduate Institute for Policy Studies(*), 2013 Asia-Pacific Economic Association Annual Conference(*) (* = presented by coauthor) Research in Progress The Impact of Key Employee Retention Plan (KERP) on Corporate Restructuring Abstract: Do managerial incentives affect the outcome of corporate restructuring? I analyze this problem focusing on the use of KERPs (Key Employee Retention Plans) in bankrupt firms and its impact on corporate restructuring outcome. A KERP is a debtor-proposed compensation contract for the executives and senior managements of a firm undergoing Chapter 11 reorganization process, which is restricted by the Bankruptcy Abuse Prevention and Consumer Protection Act of Using difference-in-difference approach over this legal reform, I identify that the performance-based compensation in Chapter 11 transfers value from creditors to shareholders. Furthermore, I also show that anticipated adoption of KERP significantly alters the ex-ante managerial preference of a distressed firm, which leads to an increase of offer premium when there is a takeover bid. Political Equilibrium of Trade Liberalization with Seung-Gyu (Andrew) Sim Abstract: This paper develops a framework to address the social cost of welfare inequality from trade liberalization by emphasizing how this inequality can interact with the political decision on trade 2

3 policy. In particular, we build a two-country trade model by incorporating labor market friction and heterogeneous workers. We show that trade-driven inflation and the biased improvement of wages generate distributional welfare implications within and across sectors. We then analyze the politico-economic equilibrium where the inequality becomes a source of potential conflict between social planner problem and political decision. Even if the trade reform is beneficial to total social welfare, the reform may not be implemented due to this conflict. Private Investment in Public Equity and Financial Market Innovation with David Brophy Abstract: We investigate how private investment in the public equity (PIPE) market plays an important role as an alternative equity financing mechanism to seasoned equity offering (SEO) market. By comparing corporate equity financing decisions between PIPE and SEO, we find that firms effectively succeed in equity-financing through the PIPE market even in poor external capital market conditions. We also document that by using the PIPE market and SEO market simultaneously, firms reduce the costs of raising external equity. These findings challenge the notion that the PIPE market is only for firms with poor performance and shed new light on the innovative perspective of the PIPE market. Debt Structure and Corporate Cash Holdings, Second-Year Paper Abstract: The relationship between the cash and leverage is still puzzling in literature. This paper fills the gap by examining how debt heterogeneity and derived debt structure are related with corporate cash holdings. We find that corporate cash holdings have a strong relationship with the structure of debt, and the direction of relationship varies depending on the type of debt. In particular, firms hold less cash as they have a larger proportion of secured debt, commercial paper or bank debt. On the other hand, firms show the opposite direction of cash holding behavior as they have a larger proportion of subordinated debt or convertible bonds. This paper provides new insights on the understanding of relationship between corporate cash holdings and leverage policy. Teaching Corporate Financing Decisions, Fall 2010 Independent Course Instructor, Senior BBA Elective Course (Evaluation: 4.1/5.0) Executive MBA Corporate Finance, Teaching Assistant, Corporate Financial Strategy by Prof. Nejat Seyhun Teaching Assistant, GS Global executive program by Prof. E. Han Kim Teaching Assistant, GS Global executive program by Prof. Gunter Dufey Summer 2010 MBA, Teaching Assistant, Financial Management by Prof. E. Han Kim Fall 2013 Teaching Assistant, Financial Management by Prof. Jonathan Carmel 2011,2013 Teaching Assistant, Valuation by Prof. Jonathan Carmel Teaching Assistant, Corporate Financial Policy by Prof. E. Han Kim Fall 2012 Teaching Assistant, Corporate Financial Policy by Prof. Sugato Bhattacharyya 2011,2013 Teaching Assistant, Advanced Derivatives by Prof. Jonathan Carmel 2013 Teaching Assistant, Real Options by Prof. Jonathan Carmel Teaching Assistant, Futures & Options Markets by Prof. Jonathan Carmel

4 Awards and Honors Samsung Scholarship for PhD program ($200,000), Samsung Foundation of Culture, Shinhan Bank & KAFA Scholarship for Ph.D. students, 2013 Rodkey and Fellowship,, Allan D. Gilmour Doctoral Fellowship,,, 2013 James and Ruth Close Scholarship,,, 2013 Rackham ( Graduate School) Graduate Student Research Grant, 2013 Robert D. and Janet E. Neary Scholarship,,, 2012 Rackham Graduate Student Travel Grant,, 2011, 2013 Mitsui Life Award for the Best Performance in First Year Ph.D.,, 2009 Distinguished Soldier Medal from Major General, Ministry of National Defense, Korea, 2006 Samyang Co. Yang-Young Foundation Scholar, KAIST Department of Industrial Engineering Dean s List Scholar, KAIST, Academic Presentations (Including scheduled) ASSA/KAEA Meeting Workshop (San Diego),, 2013 FMA Doctoral Consortium and Job Market Paper Sessions, Eastern Economic Association, Asia-Pacific Economic Association, 26th Australasian Finance and Banking Conference, Yonsei University, Korea Insurance Research Institute, Eastern Finance Association Research and Professional Experience Bankruptcy Law Clerk, Kim & Chang, Seoul, Korea, Jun July 2012 Research Assistant for Prof. Nejat Seyhun,, 2011 Researcher, Korea Asset Pricing & Korea Rating Co., Seoul, Korea, Researcher, Korea Institute of Fixed Income, Seoul, Korea, Application Engineer, K-Metro Co., Seoul, Korea, Business Analyst, Samsung SDS Co., Seoul, Korea, Dec Feb 2004 Business Analyst, LG-Philips LCD Co., Seoul, Korea, 2004 Other Information Citizenship: Korean, Language: Native in Korean and Fluent in English Academic Memberships: American Finance Association, American Economic Association, Econometric Society, Korea America Finance Association, Korea America Economic Association Technical Skills: Fortran, STATA, SAS, MATLAB, Java, Visual Basic, C, C++ KAIST theatrical club President (2003) & Director (2004), UCSB fencing club 4

5 References Amy Dittmar (Chair) Associate Professor of Finance (734) Jagadeesh Sivadasan Associate Professor Business Economics & Public Policy (734) H. Nejat Seyhun Professor of Finance (734) Jeffrey Smith Professor of Economics Department of Economics (734) Amiyatosh Purnanandam Associate Professor of Finance (734)