On July 12, 2022, Peter Limbach (Universität Bielefeld) presented the paper "Blockholder Representation on the Board: Theory and Evidence" at the TRR 266/TAF Research Seminar.
Prof. Dr. Limbach presented a model that helps explain why only few blockholders seek board representation despite little direct costs. In the model, inefficiently few blockholders take a board seat because it signals adverse information to outside investors, lowering trading profits. However, once taken, board seats commit blockholders to stay invested and monitor management. In light of our results, negative stock returns to appointments of blockholder-directors need not reflect rent extraction but are in line with blockholders improving performance. We provide evidence consistent with our model’s predictions using German data, which mitigates endogeneity concerns due to features of the German law.
Prof. Dr. Peter Limbach joined the University of Bielefeld in May 2021 as Professor of Corporate Finance and Governance. He holds a German Diploma (equivalent to MSc) in economics from the University of Bonn and a PhD (Dr. rer. pol.) in finance from the Karlsruhe Institute of Technology (supervisors: Martin Ruckes, Werner F.M. De Bondt). He spent several months at the Rotterdam School of Management as a visiting PhD. After his PhD, Peter was a postdoctoral researcher at the KIT before joining the University of Cologne as the CFR Junior-Professor of Investments in 2016. In 2020, he substituted the Professorship Financial Economics (Prof. Dr. Isabel Schnabel) at the University of Bonn. Peter has taught MBA and PhD courses at several universities, such as HHL Leipzig Graduate School of Management and the Universities of Dortmund, Gießen, Göttingen and Wuppertal. He was awarded the Junior Teaching Award of the Faculty of Management, Economics and Social Sciences of the University of Cologne. Peter is a research fellow of the Centre for Financial Research (CFR), Cologne. His research articles have been published in leading scientific journals in accounting and finance, including Management Science, The Accounting Review, the Journal of Financial and Quantitative Analysis, and the Journal of Corporate Finance.