M.Sc., Finance, School of Economics, Business and Law, University of Gothenburg, 2009 Completed with Distinction

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1 MOURSLI MOHAMED REDA, Gothenburg SE Sweden Cell: +46 (0) Office: +46 (0) Web site: EDUCATION Ph.D., Financial Economics,,, Sweden Expected Completion Date: May 2015 Dissertation Title: Corporate Governance, and the Design of Board of Directors Dissertation Committee: Professor Martin Holmén, Professor Erik Hjalmarsson M.Sc., Finance, School of Economics, Business and Law,, 2009 Completed with Distinction B.A., Finance and International Business, Al Akhawayn University, Morocco, 2006 Distinction: Cum laude FIELDS OF INTEREST Corporate Governance, Board of Directors, Empirical Corporate Finance DESIRED TEACHING Corporate Finance, Corporate Governance, Econometrics TEACHING EXPERIENCE Lecturer, Applied Time Series Econometrics, Fall (graduate) Lecturer, Undergraduate Econometrics, Teaching Assistant, Financial Econometrics, 2013 (graduate) Lecturer, Financial Econometrics, 2012 (graduate) Supervisor, Bachelor Thesis in Financial Economics JOB MARKET PAPER The Effects of Board Independence on Busy Directors and Firm Value: Evidence from Regulatory Changes in Sweden WORKING PAPERS The Value of a Directorship in the Eyes of Busy Directors, Investor Protection and the Predictability of Dividends and Returns: A Cross Country Comparison, 2013.

2 WORK IN PROGRESS Directors Remuneration, Discipline and Committee Participation in Sweden, CONFERENCES AND PRESENTATIONS The Effects of Board Independence on Busy Directors and Firm Value: Evidence from Regulatory Changes in Sweden. Presented at the PhD Workshop in Corporate Governance, Hanken Center for Corporate Governance, Helsinki, August 2014, the General Economics Workshop, Gothenburg, September 2014, and Swedish House of Finance National PhD workshop, Stockholm, November The Value of a Directorship in the Eyes of Busy Directors. Presented at the Center for Finance Workshop, Gothenburg, November Investor Protection and the Predictability of Dividends and Returns: A Cross Country Comparison, Presented at the Economics Department, Gothenburg, February LANGUAGES English (fluent), French (fluent), Arabic (mother tongue), Swedish (beginner) COMPUTER SKILLS STATA, MATLAB, Latex, Microsoft Office, Datastream CITIZENSHIP: Moroccan REFERENCES Professor Martin Holmén +46 (0) martin.holmen@cff.gu.se Professor Erik Hjalmarsson +46 (0) erik.hjalmarsson@economics.gu.se Professor Måns Söderbom +46 (0) mans.soderbom@economics.gu.se November

3 Dissertation Abstract Moursli Mohamed Reda My dissertation consists of two chapters. In the first paper of chapter I, The Effects of Board Independence on Busy Directors and Firm Value: Evidence from Regulatory Changes in Sweden, I use a regulatory shock to the board structure as a source of exogenous variation to study the causal impact of board independence on Swedish firm s Tobin s Q. I also investigate how the hiring of new independent directors, often busy, can explain the results. In the second paper, The Value of a Directorship in the Eyes of Busy Directors, I investigate how busy directors can value their directorships differently, and try to identify if it has an impact on firm performance. The last chapter, Investor Protection and the Predictability of Dividends and Returns: Evidence from International Markets, is a cross-country study, where I investigate if systematic differences in return and dividend predictability across countries can be explained by differences in the quality of their corporate governance. Chapter I: Board Characteristics, Independent Directors and Firm Performance A central question in corporate governance is whether board independence affects firm valuation and performance? Answering this question has important implications for the design of better corporate governance regulation, eventually leading to an improved board structure and a higher shareholder value. From a regulatory point of view, more independent boards are expected to exert better monitoring and participate in improving the management of firms. However, empirical findings show little consensus regarding the effects of independent directors on firm outcomes (see Hermalin and Weisbach (1991), Agrawal and Knoeber (1996), Bhagat and Black (2000) Bhagat and Bolton (2008, 2009)). Moreover, problems of endogeneity inherent to studies of this nature remain potent. One important aspect of this debate relate to the channels through which changes to board independence occur. Independence per se can have a positive impact on firms in the long run. However, it is not clear how an immediate switch to a majority independent board, following a change in regulation, affects firm outcomes. Another aspect of this debate is the busyness of independent board members. If independent directors are busy, the positive effect expected by regulators on firm outcomes is not warranted. In fact, the literature is divided as to whether busy independent boards have a positive or a negative impact on firm outcomes (see Fich and Shivdasani (2006), Cashman et al. (2012), Ferris et al. (2003)). Finally, the literature usually overlooks the possibility that independent (busy) directors value their directorships differently. The interesting question is what factors influence the way directors value their directorships? Factors such as firm s reputation, ownership concentration, director s ownership and compensation can play an important role in making a directorship more attractive than others. Thus, it is essential to take into account director s preferences in terms of boards they serve at, in order to better understand the effects of board composition on firm outcomes. In the first paper (Job Market Paper), The Effects of Board Independence on Busy Directors and Firm Value: Evidence from Regulatory Changes in Sweden, I use an exogenous change to the rules of corporate governance for Swedish firms in 2005 to identify the causal effects of changes in board structure on firm value. The new rules require there to be at least 50% of independent directors in the board of large firms. Such an event offers a quasi-experimental setting, where I test for the effects of changes to board independence on the market valuation of firms measured by Tobin's Q. In order to identify the effects of this shock, and alleviate endogeneity issues inherent to corporate governance studies, I use a regression discontinuity design to capture the reaction of the market to the new governance rules, taking advantage of the November

4 fact that only firms from the A-list and large firms from the O-list are required to comply with the code. The results indicate that (a) The market reacts negatively to the enactment of the new governance rules, (b) this effect is contemporaneous, and does not persist to subsequent years; and (c) Target firms that complied with the independence requirement have a lower Tobin's Q than non-target firms. I further investigate potential causes behind the estimated negative effect, by looking at the busyness of independent directors. The code imposes an increase in the number of independent directors, but does not restrict the number of outside directorships they can hold. Thus, an increase in board independence can lead to an increase in board busyness, which can explain the negative reaction from the market. Indeed, results indicate that in reaction to the code, target firms have more busy independent directors and a lower Tobin's Q than non-target firms. The second paper in this chapter, The Value of a Directorship in the Eyes of Busy Directors, studies the effect of busy directors on the value and performance of Swedish publically traded firms. I consider the case where directors value their directorships differently, either based on reputational concerns or on differences in ownership structures. To measure reputation, I use the median of ROA and market value of firms as a benchmark to rank directorships. I find that higher firm performance and value are associated with a rise in the proportion of directors that consider a firm as better, relative to other firms they hold in their portfolio of directorships. This effect holds when focusing attention on independent directors. However, a higher number of directors with outside directorships in firms with high control, does not impact the performance or the value of firms with low control. In other words, the relative control among firms held by a director does not work as an exogenous incentive for that director in reallocating his effort across directorships. Chapter II: Investor Protection and The predictability of Returns and Dividends The difference in the quality of institutions across countries plays a central role in identifying what drives equity price variations in each market. In fact, the quality of corporate governance, and the extent of law enforcement within a country have an impact on dividend policy, stock return performance, and equity market volatility (see La Porta et al. (2000), and Harvey (1995)). These effects translate into differences in the relative predictability of dividends and returns across countries. The aim of this study is to see how the relationship between the quality of corporate governance and the predictability of returns and dividends differs across countries. Thus in the final paper, Investor Protection and the Predictability of Dividends and Returns: A Cross Country Comparison, I investigate if differences in the level of investor protection across countries impacts return and dividend growth predictability. The study covers 59 equity markets representing both developed and emerging economies. I first identify if expectations about returns or dividend growth drive predictability at a country level. In order to circumvent invalid inference due to biased OLS standard errors, inherent to predictive regressions, I use the Campbell and Yogo (2006) efficient Bonferroni test of predictability. The main finding is that expectations about return explains most of the variation in current dividend yield in countries with high investor protection, while expectations about dividend growth play a similar role for countries with low investor protection. I also find that investor protection rights are positively correlated to return predictability, and negatively correlated to dividend growth predictability. November

5 Work In Progress: Directors Remuneration, Discipline and Committees Participation in Sweden In this paper I am trying to investigate the effects of having remuneration and election committees on the working of the board in Swedish publically traded firms. I also use information about the attendance of board members to board meetings, associated with their remuneration and ownership in the firm, in order to measure the degree of discipline among directors. November