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Markus Schmid
Title
Prof. Dr.
Last Name
Schmid
First name
Markus
Email
markus.schmid@unisg.ch
Phone
+41 71 224 7001
Now showing
1 - 10 of 10
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PublicationIs Director Industry Experience Valuable?We investigate whether investor reactions to the announcement of a new outside director appointment significantly depend upon the director's experience in the appointing firm's industry. Our sample includes 688 outside director appointments to boards of S&P 500 companies from 2005 to 2010. We find significantly higher announcement returns upon appointments of experienced versus inexperienced directors. To alleviate endogeneity concerns, we use the deaths of 200 directors holding 280 outside directorships as an identification strategy and find significantly more negative announcement returns associated with the deaths of experienced versus inexperienced directors. However, while our results are robust to accounting for time-fixed unobservable director and firm characteristics, we still cannot completely rule out endogenous firm-director matching driving our results.
Scopus© Citations 35 -
PublicationRisk Management, Corporate Governance, and Bank Performance in the Financial CrisisThe recent financial crisis has raised several questions with respect to the corporate governance of financial institutions. This paper investigates whether risk management-related corporate governance mechanisms, such as for example the presence of a chief risk officer (CRO) in a bank's executive board and whether the CRO reports to the CEO or directly to the board of directors, are associated with a better bank performance during the financial crisis of 2007/2008. We measure bank performance by buy-and-hold returns and ROE and we control for standard corporate governance variables such as CEO ownership, board size, and board independence. Most importantly, our results indicate that banks, in which the CRO directly reports to the board of directors and not to the CEO (or other corporate entities), exhibit significantly higher (i.e., less negative) stock returns and ROE during the crisis. In contrast, standard corporate governance variables are mostly insignificantly or even negatively related to the banks' performance during the crisis.Type: journal articleJournal: Journal of Banking and FinanceVolume: 36Issue: 12
Scopus© Citations 575 -
PublicationHow Much of the Diversification Discount Can be Explained by Poor Corporate Governance?We investigate whether the diversification discount occurs partly as an artifact of poor corporate governance. In panel data models, we find that the discount narrows by 16% to 21% when we add governance variables as regression controls. We also estimate Heckman selection models that account for the endogeneity of diversification and dynamic panel generalized method of moments models that account for the endogeneity of both diversification and governance. We find that the diversification discount persists even with these controls for endogeneity. However, in selection models the discount disappears entirely when we introduce governance variables in the second stage, and in dynamic panel GMM models the discount narrows by 37% when we include governance variables.Type: journal articleJournal: Journal of Financial EconomicsVolume: 103Issue: 1
Scopus© Citations 210 -
PublicationShould Chairman and CEO Be Separated? Leadership Structure and Firm Performance in SwitzerlandWe investigate the valuation effects of leadership structure in Switzerland where, in contrast to the U.S., a separation of the CEO and chairman functions is common. Consistent with the majority of prior research focusing on the U.S., we find no evidence of a systematic and significant difference in valuation between firms with combined and firms with separated functions. We also investigate whether leadership structure is related to firm-level corporate governance characteristics and find a similar curvilinear relationship between leadership structure and managerial shareholdings as is observed between firm value and managerial shareholdings. A possible interpretation is that agency costs associated with a combined function are mitigated by a higher incentive alignment of the CEO/chairman through an adequate level of managerial shareholdings.Type: journal articleJournal: ZfbF Schmalenbachs Zeitschrift für betriebswirtschaftliche ForschungVolume: 60Issue: 2
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PublicationAn Integrated Framework of Corporate Governance and Firm ValuationRecent empirical work shows evidence of a positive relationship between firm-specific corporate governance and firm valuation. Instead of looking at a single control mechanism, we use a broad corporate governance index and additional variables related to ownership structure, board characteristics, and leverage to provide a comprehensive description of firm-level corporate governance for a broad sample of Swiss firms. We carefully control for the endogeneity of these control mechanisms by developing a system of simultaneous equations. Our results support the widespread hypothesis of a positive relationship between corporate governance and Tobin's Q.Type: journal articleJournal: European Financial ManagementVolume: 12Issue: 2
Scopus© Citations 279 -
PublicationCorporate Governance, Unternehmensbewertung und Wettbewerb. Eine Untersuchung für die Schweiz(Mohr Siebeck, 2005)
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PublicationIndustry Expert Directors(SoF-HSG, )
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PublicationCEO Turnover and Director Reputation
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PublicationConsequences of Data Errors for the Validity of the E-index as a Proxy for Corporate Governance( 2021-07)
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PublicationBoard Industry Experience, Firm Value, and Investment BehaviorWe analyze the valuation effect of board industry experience and channels through which industry experience of outside directors affects firm value. Our analysis shows that firms with more experienced outside directors are valued at a premium compared to firms with less experienced outside directors. Additional analyses, including a quasi-experimental setting based on director deaths, mitigate endogeneity concerns. Firms with experienced boards limit investment distortions (lower investment-cash flow sensitivities) by building up valuable financial slack. The results further indicate that firms with experienced boards undertake shareholder-value friendly investments, particularly into R&D. Overall, our findings are consistent with board industry experience being a valuable corporate governance mechanism.