Deniz Yavuz
Welcome to my webpage.
I am joining to Arizona State University finance department in fall 2006. You can contact me from deniz dot yavuz at yale dot edu until the end of summer, I will post my new e-mail here.
My research is focused on corporate finance including corporate governance, the theory of the firm, contracts and partnerhsips. I am also interested in asset pricing with applications to wealth redistribution, international finance and trading behavior.
My Committee Members are:
- Professor Jonathan Ingersoll (Chair)
- Professor Nicholas Barberis
- Professor Judith Chevalier
- Professor Benjamin Polak
- Professor Geert Rouwenhorst
Do Regulations Matter? Wealth Redistribution and the Cost of Equity (Job Market Paper).
Asset pricing models predict that country-specific output shocks can be diversified away by risk sharing through trade or by portfolio diversification. However, the corporate governance literature has argued that country-specific regulations are important for the cost of equity. This paper asks two important questions; why are regulations different from other country-specific factors and why cannot investors fully diversify these risks? Under mild assumptions, regulations affect the redistribution of wealth between minority and controlling shareholders. Unlike other country-specific factors, such redistribution does not directly affect aggregate consumption, and hence cannot be shared through trade. Redistribution increases the systematic risk of minority shareholders, especially in countries with weaker regulations, larger size and higher growth volatility. I provide empirical evidence that country specific regulations explain systematic risk and the cost of equity. The economic impact is also significant; securities laws that improve disclosure requirements can decrease the cost of equity by up to 3%.
The Effect of Long-Term Relationships on the Theory of the Firm: A Renegotiation Proof Approach.
The standard theory of the firm (Grossman and Hart, 1986; Hart and Moore, 1990) is based on the analysis of a single period interaction. A new literature argues that long-term relations (relational contracts) affect the optimal allocation of ownership. Hart (2001) points out that this literature makes a very strong assumption that agents are capable of committing not to renegotiate the initial agreement. This assumption is both unrealistic and influential on the ownership allocation decision. I first solve the renegotiation problem in repeated games by relaxing the assumption that game structure is independent of the history of play. Then, I contribute to the discussion above by analyzing the effect of renegotiation-proof long-term contracts on the theory of the firm. I show that the optimal ownership in the Grossman-Hart-Moore one period model is also optimal in long-term relationships for both very low and very high discount rates. However, there may be a mid-region where joint ventures are optimal. Joint ventures have a higher chance of being optimal in industries where agents’ actions affect the structure of the game, i.e. where reputation and network effects are important.