Tom Shohfi 
Assistant Professor of Finance and Accounting

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Working Papers

Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

with Thomas J. Boulton and Pengcheng Zhu
July 2017

This paper uses actual negotiations between angel investors and entrepreneurs to study the impact of personal characteristics on investment outcomes. Using a new dataset of 611 investment requests led by 928 entrepreneurs, we find evidence that the personal characteristics of the entrepreneur, including gender, race, and age, are correlated with entrepreneurs’ requested valuations, the likelihood that an offer is received, and the implied valuation when an angel investor extends an offer. We also find evidence that homophily influences the outcome of negotiations. Specifically, shared personal characteristics affect the likelihood that an investor makes an offer, the entrepreneur accepts an offer, and the implied valuation when an offer is extended.

Best Paper Winner, 2016 FMA Conference on Finance and Investment in Creative Ventures

The Dark Side of Blockholder Philanthropy

with Roger M. White
July 2017

We examine the market reaction to charitable pledges representing the majority of net worth held by blockholders of public firms. Experimental research suggests that such charity brings benefits, as counterparties grant preferential terms when contracting with philanthropic principals. However, these studies abstract from potential agency problems that could arise if a blockholder’s philanthropy signals a weakening preference for wealth maximization (and is indicative of distraction or relaxed monitoring). We find that these agency costs overwhelm any benefits and are most severe where monitoring needs are high and blockholder monitoring is thought to be strict.

Featured at the Harvard Law School Forum on Corporate Governance and Financial Regulation (December 8th, 2016)

Implications of Buy-Side Analysts' Participation in Public Earnings Conference Calls

with Andy Call and Nate Sharp
May 2017

Using a sample of 81,000 transcripts for 3,300 companies from 2007 to 2016, we examine the frequency and nature of buy-side analysts’ participation in the Q&A session of public earnings conference calls. We find that buy-side analysts ask questions on approximately 18% of all conference calls, with those employed by hedge funds (mutual funds) representing 47% (19%) of this participation. Buy-side analysts are more likely to appear on conference calls of smaller companies followed by fewer sell-side analysts, suggesting buy-side analysts are more likely to ask questions on conference calls hosted by companies with greater information uncertainty. Management prioritizes buy-side analysts during conference calls but discriminates against hedge fund analysts when firm short interest is high. We also find that, relative to sell-side analysts, buy-side analysts’ interactions are shorter and their exchanges with management exhibit less favorable tone. Finally, we show that buy-side appearances on public earnings conference calls are associated with subsequent decreases in sell-side coverage, an immediate drop in stock returns, and increases in bid-ask spreads, implied volatility, and short interest.

Earnings Conference Call-Level Analyst Participation Data (Stata)
Appendix: List of Participant Institution Classifications

Pittsburgh Building - Room 1118
Rensselaer Polytechnic Institute
Lally School of Management
Troy, NY 12065-3590
s...@rpi.edu
http://shohfi.com/tom/



©2017 Tom Shohfi