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Publication

Three essays in finance

Hupka, Yuri A.
Abstract
Essay one examines multiple aspects of executive compensation using NCAA football head coach salaries. Our setting provides unique advantages to answering whether over- and under-paid salaries impact future performance. First, we observe the coaches' entire professional history, finding that firms non-myopically incorporate previous performance during contract negotiation. Second, all aspects of coach pay are explicitly outlined in the contract, allowing us to precisely value performance components of compensation. Additionally, we argue the managerial pay-performance nexus is more accurately estimated using the value of the entire contract versus annual compensation. We find that when a coach's total contract is excessively overpaid, future team performance suffers. Negative returns to overpaid contracts are the result of performance compensation, not guaranteed pay. Our results concur with the excess compensation literature, while being antithetical to tranches of conclusions made by the sports and managerial “pay-for-performance" research. Further investigations suggest this dichotomy is likely due to bias stemming from specification errors.
Essay two provides a literature review of academic research related to liquefied natural gas (LNG) hubs development and market integration. Studies show that Asian markets lack a transparent pricing benchmark which exists in North American and European markets. As a result, the formation of functional LNG market hubs in the Asia Pacific region will take time. Early research evidence suggests a strongly cointegrated relationship between LNG and crude oil. Concurring with more recent findings, we confirm that LNG's statistical relationship to both WTI and Brent ceases after the break dates of August 2008 and October 2015, respectively. Multiple initiatives are underway to facilitate development and price discovery for global LNG markets. However, the conclusions found within prior literature are dependent upon the sophistication of the estimation model and sample ranges employed.
Essay three documents a strong co-movement between a firm's corporate social responsibility (CSR) score and the CSR scores of their social network. This result is strongest for the CEO's social network and when firms that have a high number of connections or more central positions within a network. Our results are robust within firm (firm fixed effect model) and cross-sectional variation (industry fixed effect model). Furthermore, our results are robust to exogenous shocks to social networks including forced CEO turnover and the death of a director. Our research documents that social network-based peer effects have an important role in corporate CSR policy.
Date
2023-05
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