“Creating Value by Diluting Managerial Ownership”
by Bünyamin Önal
Sabancı University
Place: MA-330
Abstract
Owner-managers of competing firms benefit when they jointly commit to reducing efforts by lowering their stakes in their respective firms. Convertible debt helps to sustain such cooperation. By issuing debt that is convertible into equity, the owner of a firm can commit to reducing her stake only if her rival does the same. Empirical evidence strongly supports this theory: firms are more likely to issue convertible debt when they face more antitrust scrutiny or when the possibility of a rival entry is high. Furthermore, this effect is located typically where our theory predicts, i.e., when the firm is privately held and in a high-growth industry.
Bio
Bünyamin Önal is an Assistant Professor of Finance at Sabancı University. He previously worked at Aalto University (2012–2019) and holds a Ph.D. in Finance from Georgia State University (2012) and a B.Sc. in Economics from Middle East Technical University (2004). His research focuses on corporate finance and governance, covering topics such as boards of directors, executive compensation, mergers and acquisitions, capital structure, and corporate social responsibility. His work appeared in leading journals including Review of Financial Studies and Journal of Corporate Finance as well as outlets such as Fortune, AACSB Research Roundup, and Harvard Law School Forum on Corporate Governance and Financial Regulation.
