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
September 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

Bank Loan Renegotiation and Credit Default Swaps

with Brian Clark, James Donato, and Bill Francis
October 2017

We find that the inception of CDS trading on reference firms’ debt is associated with a decreased number and lower probability of amendments, restatements, and rollovers to existing lenders of bank loans. Reference firms are also less likely to terminate loans prematurely or refinance with different lenders after the inception of CDS trading and tend to experience shorter loan renegotiations. Evidence is consistent with the “empty creditor” problem arising from CDS trading and the resulting decrease in the negotiation power of borrowers. Our research contributes to understanding how financial innovations alter bank lending relationships.

The Dark Side of Blockholder Philanthropy

with Roger M. White
August 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
October 2017

The Q&A session of public earnings conference calls represents a unique opportunity for stakeholders to interact with senior management. We examine buy-side analysts’ participation on these calls and the associated capital-market implications. Using 81,000 transcripts for 3,300 companies from 2007 to 2016, we find that buy-side analysts ask questions on approximately 18% of calls. Management prioritizes buy-side analysts, but discriminates against analysts from hedge funds when short interest is high. Relative to sell-side analysts, buy-side analysts’ interactions with management are shorter and less favorable. Buy-side appearances are also associated with increases in information asymmetry and reductions in sell-side activity.

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

©2017 Tom Shohfi