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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 - 7 of 7
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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 -
PublicationGeographical Diversification and Firm Value in the Financial SectorThis paper investigates whether geographic diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Our dataset comprises approximately 3,579 observations over the period from 1985 to 2004 and covers the entire range of U.S. financial intermediaries - commercial banks, investment banks, insurance companies, asset managers, and financial infrastructure services firms. We use two alternative measures of geographic diversification: (1) a dummy variable whether the firm reports more than one geographic segment and (2) the percentage of sales from non-domestic operations. Our results indicate that geographic diversification is not associated with a significant valuation discount in financial intermediaries. However, when accounting for the firms' main activity-areas, we find evidence of a significant discount associated with geographic diversification in securities firms and a premium in credit intermediaries and insurance companies. All these results are robust after taking into account functional diversification of the firms as well as a potential endogeneity of both functional and geographic diversification.Type: journal articleJournal: Journal of Empirical FinanceVolume: 19Issue: 1
Scopus© Citations 26 -
PublicationProduct Market Competition, Managerial Incentives and Firm ValuationThis paper contributes to the very small empirical literature on the effects of competition on managerial incentive schemes. Based on a theoretical model that incorporates both strategic interaction between firms and a principal agent relationship, we analyze the relationship between product market competition, incentive schemes and firm valuation. The model predicts a nonlinear relationship between the intensity of product market competition and the strength of managerial incentives. We test the implications of our model empirically based on a unique and hand-collected dataset comprising over 600 observations on 200 Swiss firms over the 2002 to 2005 period. Our results suggest that, consistent with the implications of our model, the relation between product market competition and managerial intensive schemes is convex indicating that above a certain level of intensity in product market competition, the marginal effect of competition on the strength of the incentive schemes increases in the level of competition. Moreover, competition is associated with lower firm values. These results are robust to accounting for a potential endogeneity of managerial incentives and firm value in a simultaneous equations framework.Type: journal articleJournal: European Financial ManagementVolume: 17Issue: 2
Scopus© Citations 60 -
PublicationType: journal articleJournal: Journal of Financial IntermediationVolume: 18Issue: 2
Scopus© Citations 125 -
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)