Bang Dang Nguyen

Companies whose directors are connected to winning US gubernatorial candidates increase in value and are more likely to receive state subsidies, loans and tax credits, says new study co-authored at Cambridge Judge Business School. The late Speaker of the US House of Representatives, Thomas P. "Tip" O'Neill, famously said that "all politics is local." A new study co-authored at University of Cambridge Judge Business School finds that this applies big time to companies whose directors have connections to winning US gubernatorial candidates. Local companies whose directors have connections (measured by college alumni ties) to the winning US gubernatorial candidates over an 11-year period (1999 to 2010) enjoyed increased value and are more likely to benefit from state subsidies, loans, and tax credits. These local firms also secure better access to bank loans, with lower interest rates, and enjoy better long-term performance. Twelve states hold gubernatorial elections in November 2016: Delaware, North Carolina, New Hampshire, Vermont, West Virginia, Indiana, Missouri, North Dakota, Montana, Utah, Washington and Oregon. "Many studies have focused on the internal role of directors in corporate governance, but this study looks instead at how directors' external social networks impact firm value and decisions," says co-author Bang Dang Nguyen,…

For firm valuation, more news (good and bad) about CEOs is good news. More news about a company's chief executive – positive and not – is good news when it comes to the firm's valuation, according to a study at University of Cambridge Judge Business School. More media coverage of a CEO is a "channel of investor recognition" that also helps the chief executive extract higher compensation, says the study published in the Quarterly Journal of Finance. "The study shows that, in the long term, if a firm's CEO attracts more media coverage the firm will do better in terms of valuation," says Bang Dang Nguyen, University Lecturer in Finance and Director of the MPhil in Finance Programme at Cambridge Judge. We live in a world of incomplete information, and the study shows that additional coverage of a company's CEO helps fill that information gap for investors, and this contributes to additional valuation. The issue of CEO press exposure – whether and how much – is one regularly debated by company strategists. So the study provides a key insight: despite the risk of negative news coverage now and again, it is advantageous to firm valuation for a CEO to be…

All sides on the debate into top executives' pay have usually found common ground on just one thing – that there is no empirical way of telling if a CEO is overpaid or not. Now two academics claim they can provide this missing piece of the puzzle with a new economic model that separates the overpaid from the justly paid, and puts a figure on CEO contribution to shareholder value for the first time. Bang Dang Nguyen of the University of Cambridge Judge Business School and Kasper Meisner Nielsen from the Hong Kong University of Science and Technology recently concluded a five year study into the thorny question of CEO pay, reaching some startlingly cut and dried conclusions. They claim they have provided empirical evidence to show that, 1) 42% of top executives are overpaid while 58% are not and, 2) on average, a top executive takes home 71 cents, (a CEO, 65 cents), of every dollar they create for shareholders. In a forthcoming article for Management Science journal, Nguyen and Nielsen suggest their research has important real-world implications for how top executive pay is regulated, (including the controversial EU cap on banker bonuses), and the general debate on top…