Shawn Kim

• Shawn Kim (Working), Investor Preferences and Responses to Disclosure: Evidence from Carbon Net-Zero Pledges. (Job Market Paper). Abstract

  I study how investors with different preferences respond differently to disclosures using carbon net-zero pledges as a setting. While extant accounting literature examines the overall market responses to disclosures, recent theoretical work suggests that investors with heterogeneous preferences may respond differently to disclosures, and such varied responses would be muddled in overall market responses. I empirically identify three types of mutual funds with different preferences for firms’ environmental performances, and test how they respond differently to net-zero pledges. I find that green funds—which state that improving the environment is one of their main objectives—respond positively to net-zero pledges. Non-green funds—which do not claim to be pursuing environmental objectives and whose portfolios consist of firms with relatively low environmental scores—exhibit no significant response to net-zero pledges. Moreover, I find that green funds that “walk the talk” by investing in greener portfolios respond more positively to more credible net-zero pledges and pledges made by companies with superior environmental reputations. In contrast, green funds with portfolios containing firms with lower environmental performance respond less positively to more credible pledges and are insensitive to the pledging companies’ environmental reputations. Overall, despite an insignificant market return response to net-zero pledges, I find that the subset of investors with preferences for environmental performance responds positively to these pledges. My findings further suggest that while some green funds carefully examine the credibility of net-zero pledges and respond accordingly, others seem to be primarily focused on the “net-zero” label and simply reward companies for obtaining the label by making these pledges.

• Shawn Kim, Luzi Hail, Rachel Xi Zhang (Working), How Do Managers Greenwash? Evidence from Earnings Conference Calls. Abstract

  We investigate three forms of potential greenwashing during earnings conference calls, an important channel of direct communication between a company’s top management team, investors, equity analysts, and the business press. First, using analyst questions as a proxy for firms’ underlying climate change activities, we show that corporate managers’ over-discussion of climate change issues is associated with favorable external ESG ratings, investment from green mutual funds, and lower likelihood of forced CEO terminations. Second, we show that within the same conference call, managers are more likely to mention climate change, and in a more optimistic and confident tone, when responding to difficult questions. This is consistent with managers using climate change to shift the narrative and to avoid difficult questions. Finally, within the same call, managers talk about firm-related climate change issues more positively and with greater certainty, as compared to how they talk about the firm’s current and future performance, as well as compared to how analysts talk about climate change-related issues. These results are consistent with managers overstating their firm’s environmental performance. Overall, our evidence suggests that greenwashing is prevalent in the regular communication between managers and investors and that such greenwashing occurs at the top management team’s discretion.

• Shawn Kim, Wayne Guay, David Tsui (Working), Determinants of Insider Trading Windows. Abstract

  We use observed insider trades to assess the economic determinants that explain the enforcement of company-imposed quarterly open trading windows. We find that insider trading restrictions reflect concerns about information asymmetry, the strength of external monitoring, and executives’ liquidity needs. We also show that enforced trading windows constrain opportunistic insider trading activity, with insiders generating larger trading profits when boards set trading policies that are abnormally loose. We also identify and explore the enforcement of event-specific “ad hoc blackout windows,” by firms engaged in material corporate events. Interestingly, the absence of trading in these windows is associated with contemporaneously higher information asymmetry. These periods are then followed by increased trading volume and higher stock returns, suggesting investors may not immediately incorporate all information conveyed by unscheduled trading restrictions.

• Shawn Kim (Working), Influential Institutional Investors. Abstract

  Using mutual funds’ voting behaviors and outcomes in close votes and contentious proposals, I identify influential mutual funds and examine their determinants and effects on portfolio firms. Influential mutual funds are funds that seem to make independent voting decisions and are effective in swaying other investors to obtain desired outcomes. I find that mutual funds’ private information and communication abilities are key determinants of investor influence. I also find that firms owned more by influential mutual funds exhibit higher sensitivity of forced CEO turnover to prior performance. A hedge portfolio taking a long position in firms with the highest influential fund ownership and an offsetting short position in firms with zero influential fund ownership earns positive abnormal returns. My results are consistent with influential mutual funds being effective monitors and implicitly acting as delegated monitors, and suggest influence from other investors as another important factor in institutional investors’ voting behavior.

Past Courses

• ACCT1010 - Acct & Financial Report

  This course is an introduction to the basic concepts and standards underlying financial accounting systems. Several important concepts will be studied in detail, including: revenue recognition, inventory, long-lived assets, present value, and long term liabilities. The course emphasizes the construction of the basic financial accounting statements - the income statement, balance sheet, and cash flow statement - as well as their interpretation.

• ACCT1020 - Strategic Cost Analysis

  Strategic Cost Analysis is the process of analyzing and managing costs in order to improve the strategic position of the business. This goal can be accomplished by having a thorough understanding of which activities and costs support an organization's strategic position and which activities and costs either weaken it or have no impact. Subsequent cost management efforts can then focus on reducing or limiting expenditures on activities that add little or no strategic value, while increasing expenditures on activities that support the strategic position of the organization. Performance can then be evaluated to ensure that the chosen actions are taken, and that these actions are yielding improved strategic performance. Throughout the course, a strategic cost analysis and management framework will be applied across functions and organizations to highlight the cost analysis and performance evaluation methods available to forecast financial performance and improve strategic position.

AAA/Deloitte Foundation/J. Michael Cook Doctoral Consortium Fellow, 2022
FARS MYM Excellence in Reviewing Award, 2022
Class of 1939 Graduate Fellowship, 2018
George James Doctoral Fellowship, 2018
Wharton Doctoral Fellowship, 2018 – 2023

Knowledge at Wharton
How Companies Are Working to Curb Insider Trading – 7/6/2021

Harvard Law School Forum on Corporate Governance
Determinants of Insider Trading Windows – 6/2/2021

Knowledge @ Wharton

• Building Stronger Family Offices by Sharing Knowledge and Securing the Future, Knowledge @ Wharton - 11/21/2024
• State of the NBA with Seth Partnow, Knowledge @ Wharton - 11/20/2024
• How Are Companies Really Using AI? A New Report Has Answers, Knowledge @ Wharton - 11/19/2024
• Impact vs. Time: A Leader’s Guide to Slow Productivity, Knowledge @ Wharton - 11/19/2024
• Kevin O’Leary Illustrates the Benefits of Tariffs for U.S. Businesses, Knowledge @ Wharton - 11/19/2024
• Boosting Donations Through Self-expressive Choices | Jonah Berger, Knowledge @ Wharton - 11/19/2024
• Why Are Hospitals So Expensive?, Knowledge @ Wharton - 11/18/2024
• New Phenomena in Behavioral and Social Investing, Knowledge @ Wharton - 11/18/2024
• Bigger Hospitals, Better Care? Wharton Research Finds Benefits Are Only at the Operational Level, Knowledge @ Wharton - 11/14/2024
• Linda Dow Cash, CEO, Two Chicks Cocktails, Knowledge @ Wharton - 11/14/2024