Author Presentation of Findings: September 19, 2014
They are requesting proposals for extensive new research projects on the role of stock prices as a corporate governance mechanism, and the effects on the decision making of corporate managements, boards of directors, and investors. Selected authors will present their findings at a Columbia University conference tentatively scheduled for September 19, 2014.
The daily price movement of a company’s public equity is often viewed as an indicator of market approval or disapproval to both routine news, such as quarterly earnings, or unexpected developments such as takeover offers or restructurings. It is assumed that the market price is representative of the market clearing price for all the company’s shareholders, or at least a large proportion of them.
However these trends have changed over time, today senior corporate managers and boards of directors appear to be significantly influenced by short-term stock prices. Managers’ reliance on market price as a sentiment indicator suggests that understanding whether and how short-term price fluctuations actually reflect investors’ views is a critical-and under-examined-area for research.
TOPICS OF RESEARCH
Topics of interest include, but are not limited to:
- When does market price accurately or inaccurately reflect the sentiment of underlying shareholders in a company? Market price is ‘instantaneous’ and only determined by those in the market. Therefore, there may be a disconnect between market prices and the sentiment of those shareholders who trade relatively infrequently. How might we study whether such a disconnect exists? Might the disconnect be linked to particular types of information or decisions (for example, mergers and acquisitions)?
- How do stock prices influence board decisions? How do boards of directors digest signals from the market? Are these dynamics different at companies that have aggressive engagement policies and so hear directly from their shareholders? How might we systematically study the influence of prices on managerial decision-making?
- If there is a disconnect between short-term prices and investor sentiment, what other measures of shareholder views could boards use to discern the right course of action? What are the legal/regulatory issues with such an approach? What are the communication challenges? What are the market implications? That is, how might markets react if directors chose to consider other sentiment indicators beyond daily market price movements?
- Topics not specifically mentioned in these pages that fit within the project parameters are welcome.
SUBMISSION OF PROPOSALS
AWARD / HONORARIUM / TRAVEL
Awards will be based, in part, on the nature of the proposal, including whether the submission proposes new research or is an extension of existing work, and the direct costs related to the proposed research. The maximum award will be $10,000. In addition, for those projects accepted for presentation at the Millstein Center academic conference, organizers will pay for travel by one presenter per paper to Columbia University, along with room and board in New York, NY, USA for the duration of the event.
If you wish to have your proposal considered, please submit your abstract or proposal electronically as a Word or PDF document. To the extent possible, please describe the budget for the proposal in detail, including the costs of the researchers’ time, direct costs of data purchase and research support, and any other relevant costs. All identifying information should be attached via a separate page, and the submission sent via email to: