Research Paper Presentation: Jarrad Harford

Join the Gupta Governance Institute for the first seminar in the Gupta Governance Institute Fall 2020 Research Paper Seminar Series.

This session features Jarrad Harford from the University of Washington.

Disloyal Managers and Shareholders’ Wealth

Abstract:

The prohibition against fiduciaries appropriating business opportunities from their companies is a fundamental part of the duty of loyalty, the expectation of which is integral to U.S. corporate governance. However, starting in 2000, several states, including Delaware, allowed boards to waive this duty. Exploiting the staggered passage of waiver laws, we show that this weakening of fiduciary duty has significantly decreased firms’ investment in innovation. Firms covered by waiver laws invest less in R&D, produce fewer and less valuable patents. Remaining innovation activities contribute less to firm value, a fact confirmed by the market reaction when firms reveal their curtailed internal growth opportunities by announcing acquisitions.

Each hour-long seminar will feature one academic research paper. We strive to make the seminars as interactive as possible, within the Zoom platform. Additional detail, including the paper being presented, will be added later.

The Zoom link will be sent in advance of the seminar. To facilitate engagement, we ask all participants to keep their camera on throughout the seminar.