I am Iris Wang, a Ph.D. candidate in Finance at Sauder School of Business, the University of British Columbia. My research interests are Corporate and Crypto Governance, Decentralized Finance, Labour, and Entrepreneurship.
Link to my CV
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Phone: +1 (778) 682-9643
This paper examines whether proxy advisors’ recommendations are aligned with predictions of classical agency theory. Standard agency theory posits that agents affected by common shocks should be evaluated on the basis of their relative performance. Building on agency theory, I investigate whether proxy advisors, when assessing the quality of firms’ CEOs, are able to filter out components of firm performance that are caused by factors beyond the CEOs’ control. Specifically, I answer this question by focusing on recommendations for say-on-pay proposals from the largest proxy advisory firm, Institutional Shareholder Services. The result is not consistent with classical agency theory. I conclude that proxy advisors allow exogenous shocks to firm performance to affect their decision to support a CEO’s pay package; I explore other possible explanations.
We develop a novel measure of disagreement in voice between active and passive mutual funds using their proxy votes that captures shareholder conflicts in public firms. We show that the disagreement in voice between passive and active mutual funds destroys firm value and suggest that the firm value loss is due to conflicting incentives between the two groups of mutual funds. Using Federal Open Market Committee announcements with press conferences as events that create scope for investors to make informed votes and interpret news differently for individual firms, we show that such value-destroying effect of disagreement is likely causal.
We study the role of national culture in explaining within-firm pay inequality in closely-held firms owned by immigrants using a unique employee-employer matched dataset linked with firm ownership and immigrant records in Canada over the 2001 – 2017 period. We find that culture that immigrant owners carry from their home countries is an economically significant determinant of pay inequality within their firms. We show that Hofstede’s individualism is a key cultural dimension affecting within-firm pay inequality: firms owned by individuals from more individualistic countries have larger pay inequality. We show that the impact of culture on within-firm pay inequality is causal. In a difference-in-differences setting using firms that undergo ownership changes, we find a significant increase in within-firm pay inequality after the firm was taken over by immigrant owners from a country with higher within-firm pay inequality or from a more individualistic country. We find similar results among employee stayers; among employee stayers in firms within a labor-intensive industry where production technology is comparable; when the owner changes were caused by deaths of prior owners. Overall, our findings suggest that informal institutions such as national culture are important determinants of income inequality.