Warwick Economics researcher celebrates his 100th publication

The Department of Economics is delighted that our researcher Professor Dan Bernhardt (University of Warwick, University of Illinois) has recently celebrated an academic milestone by having had his 99th and 100th publication accepted in refereed journals.

We are also pleased to see that two of the Department’s former students are on the co-authors list: Guillem Ordonez-Calafi (PhD Economics 2018), now Lecturer in Finance at School of Accounting and Finance, University of Bristol, and Evangelos Constantinou (BSc Economics, 2010), currently studying for a PhD in Economics at the University of Illinois.

The two working papers, first published in The Warwick Economics Research Paper Series (TWERPS), are awaiting publication as detailed below:

“Blockholder Disclosure Thresholds and Hedge Fund Activism” - Journal of Financial and Quantitative Analysis

How large a stake should a hedge fund be permitted to acquire in a firm without publicly disclosing that information? In “Blockholder Disclosure Thresholds and Hedge Fund Activism” Guillem Ordonez-Calafi and Dan Bernhardt address this topic from the perspectives of retail investors, activist funds, and society.

In their paper, Dan and Guillem derive how disclosure thresholds affect the extent of hedge fund activism, managerial performance, and the initial capital investments made by retail investors, i.e., real investment. They show that activist funds never benefit from a disclosure threshold just because it boosts real investment. However, they find that activist funds can gain from a threshold if, by reducing their own incentives to intervene, it provides managers with enough incentives to act against the interests of their shareholders.

They also find that, depending on how disclosure thresholds affect managerial behavior, either uninformed investors or activist funds may value a lower threshold, but that the optimal threshold for society always lies between these two. This reflects that society does not internalise transfers between retail investors and activist funds in financial markets, but it does care about the real effects that follow from these transfers, namely investment and managerial discipline.

The analysis reflects that optimal disclosure threshold policies are determined by market and firm characteristics. Hence, their recommendations point towards a more tailored approach to these rules that can take into account factors like firm size, market liquidity, and existing regulation that protects management from market disciplining forces.

Read the full paper here.

“When Do Co-located Firms Selling Identical Products Thrive?” – Journal of Industrial Economics

Dan’s 100th publication, co-authored with Evangelos Constantinou, a PhD student at the University of Illinois, and Mehdi Shadmehr, Associate Professor at the University of North Carolina, analyses how the price competition between co-located firms interacts with the price-elasticity of the decisions of consumers of where to shop to determine the profits of isolated and co-located firms.

Dan and his co-authors establish that the profits of co-located stores first rise with the number of comparison shoppers, before falling. That is, co-located stores thrive when there are some comparison shoppers, but not too many. They then show that this effect is enhanced when consumers know at the outset if they will have time to comparison shop before picking a shopping location.

Read the full paper here.

2021 has been a very good year for Dan so far, with other papers accepted in: Journal of Finance, Journal of Economic Theory, Canadian Journal of Economics, and Review of Asset Pricing Studies.

We congratulate Dan on his achievement and wish him success with future publications.

DETAILS OF PUBLICATIONS

Ordonez-Calafi, Guillem & Bernhardt, Dan, 2019. "Blockholder Disclosure Thresholds and Hedge Fund Activism," The Warwick Economics Research Paper Series (TWERPS) 1203, University of Warwick, Department of Economics.

Bernhardt, Dan & Constantinou, Evangelos & Shadmehr, Mehdi, 2019. "When do co-located firms selling identical products thrive?," The Warwick Economics Research Paper Series (TWERPS) 1202, University of Warwick, Department of Economics.

ABOUT THE AUTHOR and CO-AUTHORS

Dan Bernhardt is Professor of Economics at the University of Warwick and the University of Illinois, US. He has a substantial track record of publications in Applied Microeconomic Theory, Financial Economics, Market Microstructure, Industrial Organisation and Labour Economics.

Guillem Ordonez-Calafi is a former student of the Department of Economics who was awarded his PhD in Economics in 2018. He is a Lecturer in Finance at the School of Accounting and Finance, University of Bristol.

Evangelos Constantinou is a former student of the Department who completed his BSc in Economics in 2010 and currently studying for his PhD in Economics at the University of Illinois.

Mehdi Shadmehr is an Associate Professor at the University of North Carolina, US.