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Browsing by Author "Choi, Daewoung"

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    After the Financial Crisis: Heterogeneity of Consumer Optimism and Investment in Risky Assets
    (2016) Choi, Daewoung; Kim, Kyung Tae
    We examined the effects of heterogeneous optimism on risky asset investment in the period following the 2008 financial crisis by distinguishing between the micro and macro levels of individuals’ optimism in data provided by the Survey of Consumer Finances (SCF). The baseline logit model showed that the general measure of optimism, which ignores the heterogeneity of one’s’ beliefs in micro and macro levels of optimism, was associated negatively with stock holdings in the period following the financial crisis. This result is in contrast to the findings of prior studies of household optimism. Using the distinct levels of individuals’ optimism, we found that households that are optimistic only about their future income growth are more likely to have directly held stocks in their financial portfolio, and this effect held continuously during the post-crisis period. However, households that are optimistic only about the future economy are less likely to invest directly in stocks during this period. This opposite effect of macro optimism may offset the positive role of individuals’ optimism on risky asset investment that has been documented in previous literature. Results of multinomial logit models indeed indicated that households that possessed macro optimism held a lower portion of stocks at most.
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    Three essays in corporate finance
    (University of Alabama Libraries, 2017) Choi, Daewoung; Mobbs, Houston Shawn; University of Alabama Tuscaloosa
    My dissertation focuses on three essays. The first essay studies the effect of the 2006 compensation disclosure rules on the market for CEOs by providing additional information about CEOs’ marketability. Using unique hand-collected data on compensation peers, we find CEOs who are more frequently cited as compensation peers by other firms are more likely to leave their firms or to receive compensation increases, especially in the equity-based component of total pay. The second essay studies the dynamics of compensation peers by identifying two groups of firms: 1) Those who adjust peer groups more frequently (Active firms), and 2) Those who adjust peer groups less frequently (Non-Active firms). I find while Active firms benchmark their CEO’s pay against peer pay over time, Non-Active firms do not use their compensation peer groups for benchmarking purpose. I also find that Active firms adjust their peers both to reward CEOs for good performance, and to penalize for bad performance. On the other hand, Non-active firms adjust their peer groups only to reward CEOs. The third essay examines the role of investor relations function in the top management team. We provide evidence that firms incorporating the investor-relation function in their top management teams are more likely to have greater analyst coverage, lower analyst forecast dispersion, and to more frequently beat analysts’ estimates. These firms also exhibit lower earnings management, which suggests that firms incorporating investor relations function in their top management team are less likely to manage earnings, but instead manage analyst expectations.