Economist Michelle Lowry discusses issues of corporate finance, investment decisions

For their final seminar of the semester, the economics department welcomed Professor Michelle Lowry, the TD Bank Professor of Finance at the LeBow School of Business at Drexel University to present her research on investors’ attention to and perceptions of corporate governance.

Lowry’s research focuses on issues within empirical corporate finance, such as initial public offerings, mergers and corporate governance. Her research has been published in top finance journals such as the Journal of Financial Economics and the Review of Financial Studies. She has also been cited in well known publications including the Wall Street Journal, USA Today, NPR’s Morning Edition and Forbes.

During the lecture, Lowry discussed how shareholder voting and engagement requires shareholders to devote resources towards becoming more informed. Using public data from the U.S. Securities and Exchange Commission EDGAR database, she discussed governance-related research by investors. The final sample of data came from 89 mutual fund families and 3,700 companies, as well as data from the Institute of Social Studies (ISS) which merged with EDGAR in 2015.

Lowry said that investors give less attention to firms with lower quality governance environments. There is a negative relation between the level of research and the expected monitoring by large shareholders. More passive investors conduct less research, which, according to Lowry, is potentially troubling. She concluded that the reports are significant because governance-related research is correlated with investment decisions.

Lowry was invited to speak by Lafayette economics professor Steve Swidler, who met her at a conference in Arizona last winter. However, he knew of her professionally even before meeting her, as she is a well-known financial economist.

The professors and students in the audience asked numerous questions throughout the lecture, notably about the data concerns from EDGAR, which Lowry thoroughly explained.

“This was just a nice treat,” Swidler said, noting that the content from the lecture fits in with the department’s finance certification program, as well as the college’s corporate finance course and investment course.

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