Erin E. Smith

Assistant Professor, Finance Department
University of Rochester, Simon School of Business


Education

NYU Stern School of Business

  • Ph.D., Finance

    2014

Dartmouth College

  • A.B., Double Major: Engineering, Economics (with honors)

    2007

Research Interests

  • Corporate Finance

  • Financial Regulation

  • Bankruptcy and Distress

  • Entrepreneurial Finance

Awards

  • Best Finance Ph.D. Dissertation in Honor of Stuart I. Greenbaum

    2012
  • Edwin Elton Prize for Best Job-Market Paper

    2012
  • Jules I. Bogen Doctoral Fellowship

    2012

Working Papers

  • Do shareholders want less governance? (Job market paper)2012

    Motivated by regulatory and institutional changes in governance mechanisms, I re-examine the value of antitakeover provisions by combining regression discontinuity (RD) techniques with a novel instrumental variable. The instrument makes use of a phenomenon known as ``over-voting'' by which securities lending practices generate extra illegitimate proxy votes. Because passing an antitakeover provision requires affirmative votes from a majority of outstanding shares, as opposed to a majority of shares voted, the additional over-votes bias outcomes in favor of passage. Baseline RD estimates indicate that adopting antitakeover provisions increases shareholder value by approximately 6%. However, RD estimates may be subject to bias if parties can manipulate the outcome of close votes. Incorporating the over-voting instrument addresses this concern and reduces estimates to approximately 3%.

  • Over-voting2012

    When a share is lent, the lending institution often neglects to match the loan to a particular underlying share. The institution will then solicit the owner of the lent share for votes on corporate proposals, despite the owner's loss of voting rights. This "over-voting" introduces a pro-management bias for amendments requiring approval from a majority of shares outstanding. I develop an identification strategy to estimate the frequency of over-voting and find that it accounts for approximately four percent of votes cast. Additionally, company meetings most susceptible to over-voting bias have risk-adjusted returns that are decreasing with the portion of shares on loan.

  • Mutual fund manager wealth and fund performance 2011

    Using a one period principal-agent model, I derive conditions under which investors (the principal) induce lower levels of effort from wealthier fund managers (agents) through decreased performance-pay sensitivity. I empirically test the theoretical predictions using a proxy for mutual fund manager wealth. I find that a one standard deviation increase in managers' personal wealth leads to a one percent decrease in four-factor alpha and a ten percent decrease in fund flows. The results are statistically and economically significant and are robust to fund level and manager level fixed effects.

Other Research