To attract investor capital, firms adjust dividends to satisfy investors’ preferences. Yet
investors rarely reallocate their capital. When, then, do firms adjust dividends? This paper
shows that firms strategically increase dividends when shareholders reconsider their
portfolios. I identify such periods using large mutual fund flows, which are associated with
more discretionary trading. Firms exposed to large flows significantly increase dividends.
The response is symmetric across inflows and outflows, and announcements follow in the
quarter immediately after large flows, consistent with firms timing payout to windows of
reallocation. A difference-in-differences design exploiting the introduction of Morningstar
Sustainability Ratings supports causality. The effect is stronger among firms with high income
fund ownership, consistent with catering. Funds subsequently favor firms that raise
dividends following both inflow and outflow shocks. These findings highlight a strategic
interaction between firms and their investors around periods of portfolio reallocation.
Presentations: CSFN Conference (2026), McGill University (2026).
Working Papers
The Threat of Takeover and Employment: Evidence from International M&A Laws
Solo-authored
Abstract
Do managers proactively restructure firm employment when they face with the threat of takeover?
Using a matched global sample with the staggered adoption of M&A laws, I find a significant
decrease in employment after the implementation of M&A laws. Furthermore, this study finds
that these layoffs contribute to an enhancement in firm valuation following the enactment of
M&A laws. Cross-sectional analyses show that this effect is particularly pronounced in firms
with severe free cash flow problems and in countries with weak shareholder protection. These
results are consistent with the idea that the threat of takeover serves as an external governance
device, motivating managers to reduce inefficient employment. Additional findings show that
employment protection tend to undermine the effects of the threat of takeover on employment.
Work in Progress
Investor ESG Demand and M&A Matching: Evidence from ESG Fund Flows
Solo-authored
Abstract
This paper investigates how exposure to ESG capital flows in financial markets shapes M&A
matching. Using a firm-level measure of ESG fund flow exposure, I find that acquirers merge with
targets possessing higher ESG flow exposure than themselves. To identify the underlying motive,
I test three hypotheses: cost of capital, signaling, and greenwashing. Post-merger results show
no significant increases in ESG ownership, external financing, or ESG ratings. These findings
provide support for greenwashing, rejecting the cost of capital and signaling views. The effect
is particularly pronounced among underperforming managers. This suggests the possibility that
they utilize ESG-related M&As as symbolic window-dressing to appease stakeholders and keep
their positions.