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IMPORTANT MESSAGE: THIS IS AN OUTDATED WEBSITE. I ACCEPTED A TENURE-TRACK POSITION AT THE UNIVERSITY OF TEXAS AT AUSTIN. PLEASE CLICK HERE TO GO TO MY NEW UT WEBPAGE.Cesare FracassiPh.D. Student in Finance Contact InformationEmail: cesare.fracassi.2009@anderson.ucla.edu Curriculum VitaeClick here to download the CV in .pdf format Research“Corporate Finance Policies and Social Networks” [Nov 2008] JOB MARKET PAPER Social network theory suggests that individuals' preferences and decisions are affected by the actions of others. Such decision externalities arise from constraints on our ability to process or obtain costly information. This paper provides evidence that managers are influenced by their social peers when making corporate finance policy decisions. I create a matrix of social ties using data on current employment, past employment, education, and other activities for key executives and directors of US companies. I find that the more social connections two companies share with each other, the more similar their level of investment is, as is their change of investment over time. Furthermore, companies positioned more centrally in the universe of social networks invest in a less idiosyncratic way. The results extend to other discretionary corporate finance policies. Finally, more socially-connected firms exhibit better economic performance. To address endogeneity concerns, I find that two companies behave less similarly when an individual connecting them dies.
“External Networking and Internal Firm Governance” [Jan 2009] with Geoffrey Tate We use panel data on S&P 1500 companies to identify external network connections between directors and CEOs. We find that firms with more powerful CEOs are more likely to appoint directors with ties to the CEO and that such directors trade more like the CEO in company stock. Yet, companies with more connections between management and the board do fewer internally-prompted earnings restatements and engage in more value-destroying acquisitions, consistent with weaker board monitoring. Instrumenting for network connections, we find that these companies have lower market valuations, particularly in the absence of other governance mechanisms to substitute for board oversight.
“Stock Price Sensitivity to Dividend Changes”[July 2008] This paper examines the sensitivity of stock prices to dividend changes. The Dividend Signaling, Free-Cash-Flow, Maturity and Catering Hypotheses all predict an average positive (negative) reaction to announcement of a dividend increase (decrease). However, these hypotheses have different cross-sectional predictions. This paper documents that the positive stock price response to dividend increases is due primarily to the signaling of higher future earnings, to the managers catering to the time-varying premium assigned by the market to dividend paying stocks, and partially to the reduction of agency problems. By contrast, the negative price response to dividend decreases is mainly due to the transition from a mature life-cycle stage to a decline stage with higher systematic risk, as maintained by the Maturity Hypothesis.
Dissertation Committee MembersProf. Mark Grinblatt (Co-Chair) TeachingMGMT 430—Corporate Finance MGMT 234A—International Financial Markets
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