Improving regulation design to help shareholders and investors
Meet our new faculty member: Ali Akyol was hired as an Associate Professor at the Telfer School of Management at the University of Ottawa. He holds a PhD in Finance from the University of Alabama. We interviewed him to learn more about his research interests on the effect of the board of directors and financial misconduct on shareholder value.
Why did you choose to study Finance?
I grew up in a family of investors. As I was growing up, I was hearing all these terms associated with investing in financial markets and was curious to learn more about them. To better understand the markets, I started reading about financial markets, stocks, companies, etc. Naturally, I decided to study finance in my undergraduate degree to gain a deeper understanding of financial markets.
Any personal motivation behind your research interests on the effect of the board of directors and financial misconduct on shareholder value?
The last 2 years of my undergraduate years were marked by the governance scandals of the early 2000s and preceded by the dot-com bubble crash, during which large international companies went bankrupt partly due to how their CEOs and directors managed them. Their management failures cost their shareholders billions of dollars. To learn more, I decided to concentrate on corporate governance in my PhD. Today my research also examines the role of the board of directors and CEOs, and how their decisions affect shareholder value.
You recently published a paper in the Journal of Financial Economics, a leading Finance journal, can you share the highlights of that study?
In my recent publication entitled “Director Skill Sets”, my co-authors and I looked at director skills to understand how composition of the board (eg. their skills) affects firm value. About 37% of boards in our sample had at least one director with academic experience. 74% of boards had at least one director with leadership experience. Our study suggests that skill diversity in the boardroom can lower firm value. More specifically, a lack of communication and coordination among directors in skill-diverse boards may contribute to a lower firm value. These results point to the unwanted consequences of skill diversity in groups. Our findings challenge recent studies in finance that call for more skill diversity, and could have important implications for how a board of directors is shaped.
How can your research influence business communities in Canada?
I focus on corporate governance and how it affects shareholder value. The results of my research could inform regulators and support their efforts to improve regulation design to benefit shareholders. Overall, these results could also help regulators make effective decisions that will better protect individual investors.