Johan Sulaeman

Finance:

1. Do Shareholder Preferences Affect Corporate Policies? (Current Draft: January 2008)
(Current Draft: January 2008)

This paper examines the preferences of institutional investors for firm policies, and
the relationship between these preferences and firm decisions. I find that institutions
exhibit systematic differences in their preferences for financial and investment policies
of the firms they invest in. Furthermore, these preferences are related to subsequent
changes in the financial and investment policies of firms. In particular, a firm is more
likely to decrease (increase) its leverage ratio if its current leverage is higher (lower)
than the revealed preferences of its institutional shareholders. A firm is also more
likely to increase (decrease) its investment if its current investment ratio is lower (higher)
than the preferences of its institutional shareholders. Overall, the evidence suggests
that the preferences of institutional shareholders are important determinants of corporate
policies.

2. Do Local Investors Know More? Evidence from Mutual Fund Location and Investments
(Current Draft: August 2007)
Presented at WFA 2007 (Big Sky, Montana)

Although investors' preference for nearby investments has been widely documented
in the literature, there is no apparent consensus on whether local investors have any
informational advantage. Analyzing the equity holdings of a large sample of actively
managed mutual funds, I find evidence consistent with a perception in the mutual fund
industry that local funds have an informational advantage. However, the portfolio of
mutual funds' local holdings do not display significant superior performance relative
to the portfolio of their distant holdings. Using a parsimonious model, I hypothesize
that the profitability of local informational advantage will be low due to price impact
when there is a relatively large population of local agents who trade on similar private
information. Consistent with this hypothesis, I find that funds do earn superior returns
on local stocks for which the aggregate local capital is limited and hence the price
impact of local trades is likely to be small. Overall, the results suggest that although
local investors have some informational advantage, this local advantage does not lead
to superior abnormal performance by local managers because of the price impact of
their trading.

3. When Do High Stock Returns Trigger Equity Issues?
     (with Aydoğan Altı)
     (Current Draft: May 2008)
     Presented at AFA 2008 (New Orleans)

One of the most prominent stylized facts in corporate finance is that firms are more
likely to issue equity following periods of high stock returns. We document that firms
exhibit such timing behavior only in response to high returns that coincide with strong
institutional investor demand for their stock. When not accompanied by institutional
purchases, stock price increases have little impact on the likelihood of equity issuance.
The results suggest that potential issuers require their stock prices to be not only high
but also sustainable.

Labor Economics:

1. Strike Three: Umpires' Demand for Discrimination
      (with Christopher A. Parsons, Michael C. Yates and Daniel S. Hamermesh)
      (Current Draft: December 2007)
      NBER Working Paper #13665

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We explore umpires’ racial/ethnic discrimination in the evaluation of Major League
Baseball players. Controlling for umpire, pitcher, and batter fixed effects and other
factors, strikes are more likely to be called if the umpire and pitcher match race/
ethnicity. This effect is exists where there is little scrutiny of the umpire's behavior —
in ballparks without computerized systems monitoring umpires’ calls, at poorly
attended games, and when the next called pitch cannot determine the outcome of
the at-bat. If a pitcher shares the home plate umpire’s race/ethnicity, he gives up
fewer earned runs per game and improves his team’s chance of winning. The results
suggest that attempts to measure salary discrimination generally may be flawed, since
the productivity measures can themselves be contaminated by the effects of racial
preferences.