Sheng Guo - Academia.edu (original) (raw)

Papers by Sheng Guo

Research paper thumbnail of Managerial Power and CEO Compensation in Financially Distressed Firms

SSRN Electronic Journal, 2014

We study whether financial distress affects managerial power and Chief Executive Officers' (CEOs)... more We study whether financial distress affects managerial power and Chief Executive Officers' (CEOs) compensation in publicly traded non-financial firms. Using a bias-corrected matching estimator to identify suitable controls, we find that both governance structure and CEO compensation change when firms enter into financial distress. CEOs are less likely to be the board chairperson, and fewer executives sit on the board or on the compensation committee. CEO compensation decreases considerably for both incumbents and successors, and the decrease is driven by declines in stock-based pay. There are also fewer cases of opportunistic timing of stock option awards.

Research paper thumbnail of Financial and Housing Wealth, Expenditures and the Dividend to Ownership

SSRN Electronic Journal, 2015

For a household, home ownership provides necessary shelter, potential investment returns associat... more For a household, home ownership provides necessary shelter, potential investment returns associated with property appreciation and a hedge against increased housing related cash outlays. In addition to potential appreciation, individual households benefit over time from a housing dividend defined as the difference between the market rent for the individual household's housing unit and the household's actual house ownership costs. The purchase of a house can substantially fix a household's recurring housing related expenditures and generates a hedge (implied housing dividend) that increases with ownership tenure. This expenditure hedge (dividend) to home ownership is documented using pooled, cross-year samples from the Consumer Expenditure Survey (CEX). The housing dividend delivers a non-trivial effect on household non-housing expenditures after controlling for housing value, housing equity, financial assets and income.

Research paper thumbnail of Wealth, Composition, Housing, Income and Consumption

The Journal of Real Estate Finance and Economics, 2012

The present research, which covers the latest residential boom and bust cycle, highlights that th... more The present research, which covers the latest residential boom and bust cycle, highlights that there are no uniform or constant time invariant wealth, housing, and income relations. Even more important, wealth composition is shown to be a significant determinant of consumption. The marginal effects of housing wealth, financial wealth, and income differ substantially with wealth composition. Households with the highest percentage of net worth in financial assets have much lower income effects, have substantially higher marginal effects associated with stock holdings, and have housing equity effects that differ noticeably from other households. Income effects for groups with the smallest amounts of relative financial wealth are dramatically higher than for households with greater financial wealth. Wealth and its composition affect consumption.

Research paper thumbnail of Dynamics of managerial power and ceo compensation in the course of corporate distress: Evidence from 1992 to 2019

Financial Management, 2021

We study the dynamics of two governance constructs, managerial influence over the board of direct... more We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992-2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias-corrected matching estimator, we find that distressed firms reduce managerial board appointments and CEO pay, intensify managerial incentive alignment, and increase CEO turnover. The bulk of CEO compensation changes in distressed firms derives from the performance-related part of compensation, consistent with the "shareholder value" view of CEO compensation.

Research paper thumbnail of Switching Regression Estimates of EIS for Stockholders and Non-Stockholders

This paper analyzes a panel data set of Panel Study of Income Dynamics (PSID) households and demo... more This paper analyzes a panel data set of Panel Study of Income Dynamics (PSID) households and demonstrates that the estimate of EIS (Elasticity of Intertemporal Substitution) for stockholders and non-stockholders is large and dierent between them, based upon the consumption-based capital asset pricing model (CAPM). However, recognizing possible laxities in defining and measuring stockholding status, and hence allowing for possible misclassification error therein, I use the switching regression framework to show the evidence that there is a significant portion of stockholders misclassified as non-stockholders. The correction for this misclassification error results in closer gap of EIS between these two groups. Estimates after the correction are in line with those found in repeated cross-section Consumer Expenditure Survey (CEX) samples, whereas estimates without the correction are not. This illustrates the importance of accounting for misclassification error in such contexts. To some...

Research paper thumbnail of Switching Regression Estimates of the Intergenerational Persistence of Consumption

Economic Inquiry, 2014

* I am grateful to Casey Mulligan for his guidance and support, as well as generously sharing his... more * I am grateful to Casey Mulligan for his guidance and support, as well as generously sharing his data. I would like to thank Gary Becker, Susanne Schennache, Jeffery Smith and three anonymous referees for helpful comments and suggestions. All remaining errors are mine. This article is a substantially revised version of Chapter 3 of my dissertation thesis finished at the University of Chicago.

Research paper thumbnail of Keeping Up With Fashion: Recent Trends in the Subfields of Study of Doctoral Students in Economics

We conduct an analysis of recent trends on the subfields of study that doctoral students in econo... more We conduct an analysis of recent trends on the subfields of study that doctoral students in economics choose for their dissertations. By investigating data on the JEL classification codes of dissertations reported by the Journal of Economic Literature from 1991 to 2007, we find that the trends in the subfields of study of doctoral dissertations follow those of articles published at five major general-interest journals (American Economic Review, Quarterly Journal of Economics, Journal of Political Economy, Review of Economic Studies, and Review of Economics and Statistics). In particular, the co-movement pattern is salient in subfields such as Microeconomics (D), Health, Education, and Welfare (I), and Economic Development and Growth (O). Our findings suggest that the fashion exhibited in the top-notch research journals is one of the most influential factors when doctoral students choose a subfield.

Research paper thumbnail of Margin requirements and portfolio optimization: A geometric approach

Journal of Asset Management, 2014

Using geometric illustrations, we investigate what implications of portfolio optimization in equi... more Using geometric illustrations, we investigate what implications of portfolio optimization in equilibrium can be generated by the simple mean-variance framework, under margin borrowing restrictions. First, we investigate the case of uniform marginability on all risky assets. It is shown that changing from unlimited borrowing to margin borrowing shifts the market portfolio to a riskier combination, accompanied by a higher risk premium and a lower price of risk. With the linear risk-return preference, more stringent margin requirements lead to a riskier market portfolio, contrary to the conventional belief. Second, we investigate the effects of differential marginability on portfolio optimization by allowing only one of the risky assets to be pledged as collateral. It is shown that the resulting optimal portfolio is not always tilted towards holding more of the marginable asset, when the margin requirement is loosened.

Research paper thumbnail of The superior measure of PSID consumption: An update

Research paper thumbnail of VAR Estimates of the Housing and Stock Wealth Effects: Cross-country Evidence

Working Papers, 2011

We estimate the wealth effects of housing and stock market wealth using time-series data for eigh... more We estimate the wealth effects of housing and stock market wealth using time-series data for eight developed countries. In estimation we employ the structural vector-autoregressive regressions (SVAR), which articulate the dynamic interactions of shocks to housing prices, stock values, and disposable incomes. Our results show that for these countries the initial consumption response to housing price shocks is greater than to stock market capitalization shocks, but the long-run consumption response to the latter is more persistent than to the former.

Research paper thumbnail of Managerial Power and CEO Compensation in Financially Distressed Firms

SSRN Electronic Journal, 2014

We study whether financial distress affects managerial power and Chief Executive Officers' (CEOs)... more We study whether financial distress affects managerial power and Chief Executive Officers' (CEOs) compensation in publicly traded non-financial firms. Using a bias-corrected matching estimator to identify suitable controls, we find that both governance structure and CEO compensation change when firms enter into financial distress. CEOs are less likely to be the board chairperson, and fewer executives sit on the board or on the compensation committee. CEO compensation decreases considerably for both incumbents and successors, and the decrease is driven by declines in stock-based pay. There are also fewer cases of opportunistic timing of stock option awards.

Research paper thumbnail of Financial and Housing Wealth, Expenditures and the Dividend to Ownership

SSRN Electronic Journal, 2015

For a household, home ownership provides necessary shelter, potential investment returns associat... more For a household, home ownership provides necessary shelter, potential investment returns associated with property appreciation and a hedge against increased housing related cash outlays. In addition to potential appreciation, individual households benefit over time from a housing dividend defined as the difference between the market rent for the individual household's housing unit and the household's actual house ownership costs. The purchase of a house can substantially fix a household's recurring housing related expenditures and generates a hedge (implied housing dividend) that increases with ownership tenure. This expenditure hedge (dividend) to home ownership is documented using pooled, cross-year samples from the Consumer Expenditure Survey (CEX). The housing dividend delivers a non-trivial effect on household non-housing expenditures after controlling for housing value, housing equity, financial assets and income.

Research paper thumbnail of Wealth, Composition, Housing, Income and Consumption

The Journal of Real Estate Finance and Economics, 2012

The present research, which covers the latest residential boom and bust cycle, highlights that th... more The present research, which covers the latest residential boom and bust cycle, highlights that there are no uniform or constant time invariant wealth, housing, and income relations. Even more important, wealth composition is shown to be a significant determinant of consumption. The marginal effects of housing wealth, financial wealth, and income differ substantially with wealth composition. Households with the highest percentage of net worth in financial assets have much lower income effects, have substantially higher marginal effects associated with stock holdings, and have housing equity effects that differ noticeably from other households. Income effects for groups with the smallest amounts of relative financial wealth are dramatically higher than for households with greater financial wealth. Wealth and its composition affect consumption.

Research paper thumbnail of Dynamics of managerial power and ceo compensation in the course of corporate distress: Evidence from 1992 to 2019

Financial Management, 2021

We study the dynamics of two governance constructs, managerial influence over the board of direct... more We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992-2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias-corrected matching estimator, we find that distressed firms reduce managerial board appointments and CEO pay, intensify managerial incentive alignment, and increase CEO turnover. The bulk of CEO compensation changes in distressed firms derives from the performance-related part of compensation, consistent with the "shareholder value" view of CEO compensation.

Research paper thumbnail of Switching Regression Estimates of EIS for Stockholders and Non-Stockholders

This paper analyzes a panel data set of Panel Study of Income Dynamics (PSID) households and demo... more This paper analyzes a panel data set of Panel Study of Income Dynamics (PSID) households and demonstrates that the estimate of EIS (Elasticity of Intertemporal Substitution) for stockholders and non-stockholders is large and dierent between them, based upon the consumption-based capital asset pricing model (CAPM). However, recognizing possible laxities in defining and measuring stockholding status, and hence allowing for possible misclassification error therein, I use the switching regression framework to show the evidence that there is a significant portion of stockholders misclassified as non-stockholders. The correction for this misclassification error results in closer gap of EIS between these two groups. Estimates after the correction are in line with those found in repeated cross-section Consumer Expenditure Survey (CEX) samples, whereas estimates without the correction are not. This illustrates the importance of accounting for misclassification error in such contexts. To some...

Research paper thumbnail of Switching Regression Estimates of the Intergenerational Persistence of Consumption

Economic Inquiry, 2014

* I am grateful to Casey Mulligan for his guidance and support, as well as generously sharing his... more * I am grateful to Casey Mulligan for his guidance and support, as well as generously sharing his data. I would like to thank Gary Becker, Susanne Schennache, Jeffery Smith and three anonymous referees for helpful comments and suggestions. All remaining errors are mine. This article is a substantially revised version of Chapter 3 of my dissertation thesis finished at the University of Chicago.

Research paper thumbnail of Keeping Up With Fashion: Recent Trends in the Subfields of Study of Doctoral Students in Economics

We conduct an analysis of recent trends on the subfields of study that doctoral students in econo... more We conduct an analysis of recent trends on the subfields of study that doctoral students in economics choose for their dissertations. By investigating data on the JEL classification codes of dissertations reported by the Journal of Economic Literature from 1991 to 2007, we find that the trends in the subfields of study of doctoral dissertations follow those of articles published at five major general-interest journals (American Economic Review, Quarterly Journal of Economics, Journal of Political Economy, Review of Economic Studies, and Review of Economics and Statistics). In particular, the co-movement pattern is salient in subfields such as Microeconomics (D), Health, Education, and Welfare (I), and Economic Development and Growth (O). Our findings suggest that the fashion exhibited in the top-notch research journals is one of the most influential factors when doctoral students choose a subfield.

Research paper thumbnail of Margin requirements and portfolio optimization: A geometric approach

Journal of Asset Management, 2014

Using geometric illustrations, we investigate what implications of portfolio optimization in equi... more Using geometric illustrations, we investigate what implications of portfolio optimization in equilibrium can be generated by the simple mean-variance framework, under margin borrowing restrictions. First, we investigate the case of uniform marginability on all risky assets. It is shown that changing from unlimited borrowing to margin borrowing shifts the market portfolio to a riskier combination, accompanied by a higher risk premium and a lower price of risk. With the linear risk-return preference, more stringent margin requirements lead to a riskier market portfolio, contrary to the conventional belief. Second, we investigate the effects of differential marginability on portfolio optimization by allowing only one of the risky assets to be pledged as collateral. It is shown that the resulting optimal portfolio is not always tilted towards holding more of the marginable asset, when the margin requirement is loosened.

Research paper thumbnail of The superior measure of PSID consumption: An update

Research paper thumbnail of VAR Estimates of the Housing and Stock Wealth Effects: Cross-country Evidence

Working Papers, 2011

We estimate the wealth effects of housing and stock market wealth using time-series data for eigh... more We estimate the wealth effects of housing and stock market wealth using time-series data for eight developed countries. In estimation we employ the structural vector-autoregressive regressions (SVAR), which articulate the dynamic interactions of shocks to housing prices, stock values, and disposable incomes. Our results show that for these countries the initial consumption response to housing price shocks is greater than to stock market capitalization shocks, but the long-run consumption response to the latter is more persistent than to the former.