Ahern and Zhang Land 2008 NTT Research Fellowships

The NTT Research Fellowship was awarded to two finance area faculty this year.

Kenneth Ahern, Assistant Professor, plans to investigate whether corporate culture does, in fact, affect merger returns. Inhis proposal, "The Effect of Corporate Culture on Mergers and Acquisitions," Ken plans to use SDC data and confidential data from the Census Bureau to examine corporate cultures, hypothesizing that cultural disparity between acquirer and target firms negatively affects productivity and stock returns for the merged firm. The NTT Fellowship will allow him the time to pursue the data-intensive work and to meet the strict confidentiality requirements of the Census Bureau to prepare a first draft of his research project.

Lu Zhang, Associate Professor, is awarded a fellowship for his work, "The Accrual Anomaly: Exploring the Optimal Investment Hypothesis." He proposes and tests an optimal investment hypothesis of the accrual anomaly that is potentially consistent with rationality. Interpreting accruals as working capital investment, he hypothesizes that firms optimally adjust investment in response to discount rate changes, as predicted by neoclassical q-theory of investment. When discount rates fall, more working capital investment becomes profitable and accruals increase. Future returns will decrease because lower discount rates mean lower expected returns going forward. His preliminary evidence confirms these predictions. Lu will use the award to expand and deepen the analysis in his preliminary draft and prepare the paper for journal submission