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Johnson Finance Professor Earns Best Paper Honors

05/19/2014

Hyunseob Kim’s research on corporate asset redeployability was chosen as “best paper in corporate finance” at the Society of Financial Studies annual research conference


Hyunseob Kim, assistant professor of finance at the Samuel Curtis Johnson Graduate School of Management at Cornell University, will receive a prominent research award from the Society for Financial Studies in Washington, D.C., on May 19, 2014.  Kim’s paper, "The Asset Redeployability Channel: How Uncertainty Affects Corporate Investment,” was selected as the “best paper in corporate finance” at the Finance Cavalcade, a major conference in finance. The paper was co-authored with Howard Kung, assistant professor of finance at the University of British Columbia.

Kim’s research reveals that during times of high economic uncertainty, like the recent global financial crisis, companies such as Exxon Mobil and BP, which use specialized, hard to sell assets (such as oil rigs), cut investment significantly more than other companies, like Phillip Morris which use generic assets (such as trucks). This is because companies become cautious about investment, when future business prospects are uncertain, and the decision is difficult to reverse.

”These findings have important implications for policymakers, who should be concerned about the negative effects of uncertainty on economic activities such as investment and hiring,” said Kim.

“Not being able to efficiently sell assets across firms and industries are important drivers of corporate investment,” he said. “In addition, uncertainty can significantly slow down economic growth, especially for core industries, such as manufacturing and materials, due to their need to invest in specialized machinery and equipment.”

 

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