Some Applications of Sociology and Psychology in Corporate Finance Research

1. Some Applications of Sociology and Psychology in Corporate Finance Research James Ang Florida State University

2. The Unintended Consequences of High Expectations • James Ang and Kevin Krieger • Florida State University and Tulsa University

3. Sources of Expectations on New CEOs • Labor market expectations or executives , or price (pay) for the CEOs. • Market expectations, or stock price response to announcement of CEOs’ appointments. • Firms’ previous record in fulfilling outside expectations, • Expectations of outside financial analysts.

4. Meeting expectations and earning manipulation

5. The Effect of Social Pressures on CEO Compensation • James Ang, Gregory Nagel, and Jun Yang • Florida State University, Mississippi State University, and Indiana University

6. CEO pay and the size of social circle

7. Marketing Financial Securities, It’s all in the Name: The Case of Dual-Class Share IPO and Beyond • James Ang, Ansley Chua, and Danling Jiang • Florida State Univerisity

8. Figure 2: Long-run post-IPO performance by voting rights and share class names This figure depicts the buy-and-hold abnormal returns (BHAR) of post-IPO dual-class shares by share voting rights and class names.

9. Pitching IPO:Exaggeration and the Marketing of Financial Securities • James Ang and S. Mckay Price • Florida State University

10. Table 2: Univariate Analysis, Full Sample Ho: µ = 1 Ho: µ = .5 Ha: µ ≠ 1 Ha: µ ≠ .5 Intro Section MD&A Section *** p<0.01, ** p<0.05, * p<0.1

11. Table 3: Univariate Analysis, by Size Ho: µS = µL Ha: µS ≠ µL Intro Section Small Offering < $100M Large Offering ≥ $100M *** p<0.01, ** p<0.05, * p<0.1

12. “Does CEOs’ Familiarity with Business SegmentsAffect Their Divestment Decisions?”James Ang, Abe DeJong, and Marike Van derPoelFlorida State University, Erasmus University, Rotterdam, The Netherlands.

13. The impact of CEOs’ background characteristics on corporate decisions.Familiarity biasFamiliarity, in first hand experience, previously worked in a business segment, worked in related segments within the firm, and experience outside the firm.

14. Findings: • CEOs are more likely to divest assets from non-familiar segments relative to familiar segments. • They exhibit this familiarity effect later in their tenure. • The relative bargaining power of segment managers, in the form of political clout from size, segment and organizational knowledge, moderates CEOs’ familiarity bias. • The familiarity effect of longer-tenured CEOs can be costly to shareholders, because the highest abnormal returns are generated by longer-tenured CEOs who are willing to divest from their home-base segments.

15. Are Outside Hired CEOs Superior to Inside Hired? • James Ang and Gregory Nagel, • Florida State University and Mississippi State University

16. Two methods of comparisons:A. Same level playing field • Compare CEOs in a one to one matching, with the same initial endowment and hiring circumstances. • Only new CEOs. • Asset size, within +/- 30 percent of each other; • Their industry-adjusted performance (defined below) must be within +/- 20 percent of each other in the year before the CEO’s appointment; • Hiring in the same calendar year; • Similar growth opportunities, as in Tobin’s Q.

17. 2. Appointment against type • 1) Severely underperforming hiring firm; • 2) Hiring firms that appoint turnaround specialists; • 3) Hiring firms requiring major asset restructuring; • 4) Firms suffering an exodus of managers before hiring; • 5) Firms with no succession plan; and outside candidates that are perceived to be of higher quality. These samples are CEOs: • 6) Outside CEOs raided from another firm; • 7) from firms with good performance record, • 8) from larger firms, and from the same industry.

18. Applications involving cultures • Social Capital, Cultural Biases, and Foreign Investment in High Tech Firms: Evidence from China • James Ang, Yingmei Cheng, and Chaopeng Wu* • Florida State University and Xiamen University • Cultural Differences Between Acquirers and Targets • Cultures and Analysts’ Behavior. • James Ang and Mary Anne Majadillas • Florida State University