Kathleen M Kahle

Interests

Teaching

Corporate Finance

Research

Corporate Finance

Courses

Scholarly Contributions

Journals/Publications

• Kahle, K. M., & Stulz, R. M. (2021). Why Are Corporate Payouts So High in the 2000s?. Journal of Financial Economics.
• Stulz, R. M., & Kahle, K. M. (2020). Why Are Corporate Payouts So High in the 2000s?. SSRN Electronic Journal. doi:10.2139/ssrn.3678973
• Kahle, K. M., Cao, J., & Chan, K. (2018). Risk and performance of bonds sponsored by private equity firms. Journal of Banking and Finance.
• Kahle, K. M., Zhao, W., & Intintoli, V. (2017). Director Connectedness: Monitoring Efficacy and Career Prospects. Journal of Financial and Quantitative Analysis.
• Kahle, K. M., & Stulz, R. (2017). Is the American Public Corporation in Trouble. Journal of Economic Perspectives.
• Kahle, K. M., & Intintoli, V. (2016). Cash holdings and CEO turnover. Quarterly Journal of Finance.
• Stulz, R. M., & Kahle, K. M. (2016). Is the American Public Corporation in Trouble?. SSRN Electronic Journal. doi:10.2139/ssrn.2869301
• Intintoli, V. J., Jategaonkar, S. P., & Kahle, K. M. (2014). The Effect of Demand for Shares on the Timing and Underpricing of Seasoned Equity Offers. FINANCIAL MANAGEMENT, 43(1), 61-86.
• Kahle, K. M., & Banyi, M. (2014). Declining propensity to pay? A re-examination of the lifecycle theory. Journal of Corporate Finance, 27, 345-366.
• Kahle, K. M., & Stulz, R. M. (2013). Access to capital, investment, and the financial crisis. Journal of Financial Economics, 110(2), 280-299.
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  Abstract: During the recent financial crisis, corporate borrowing and capital expenditures fall sharply. Most existing research links the two phenomena by arguing that a shock to bank lending (or, more generally, to the corporate credit supply) caused a reduction in capital expenditures. The economic significance of this causal link is tenuous, as we find that (1) bank-dependent firms do not decrease capital expenditures more than matching firms in the first year of the crisis or in the two quarters after Lehman Brother's bankruptcy; (2) firms that are unlevered before the crisis decrease capital expenditures during the crisis as much as matching firms and, proportionately, more than highly levered firms; (3) the decrease in net debt issuance for bank-dependent firms is not greater than for matching firms; (4) the average cumulative decrease in net equity issuance is more than twice the average decrease in net debt issuance from the start of the crisis through March 2009; and (5) bank-dependent firms hoard cash during the crisis compared with unlevered firms. © 2013 Elsevier B.V.
• Intintoli, V. J., & Kahle, K. M. (2010). Seasoned Equity Offers: The Effect of Insider Ownership and Float. FINANCIAL MANAGEMENT, 39(4), 1575-1599.
• Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do U.S. firms hold so much more cash than they used to?. Journal of Finance, 64(5), 1985-2021.
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  Abstract: The average cash-to-assets ratio for U.S. industrial firms more than doubles from 1980 to 2006. A measure of the economic importance of this increase is that at the end of the sample period, the average firm can retire all debt obligations with its cash holdings. Cash ratios increase because firms' cash flows become riskier. In addition, firms change: They hold fewer inventories and receivables and are increasingly R&D intensive. While the precautionary motive for cash holdings plays an important role in explaining the increase in cash ratios, we find no consistent evidence that agency conflicts contribute to the increase. © 2009 the American Finance Association.
• Bessembinder, H., Kahle, K. M., Maxwell, W. F., & Danielle, X. u. (2009). Measuring abnormal bond performance. Review of Financial Studies, 22(10), 4219-4258.
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  Abstract: We analyze the empirical power and specification of test statistics designed to detect abnormal bond returns in corporate event studies, using monthly and daily data. We find that test statistics based on frequently used methods of calculating abnormal monthly bond returns are biased. Most methods implemented in monthly data also lack power to detect abnormal returns. We also consider unique issues arising when using the newly available daily bond data, and formulate and test methods to calculate daily abnormal bond returns. Using daily bond data significantly increases the power of the tests, relative to the monthly data. Weighting individual trades by size while eliminating noninstitutional trades from the TRACE data also increases the power of the tests to detect abnormal performance, relative to using all trades or the last price of the day. Further, value-weighted portfolio-matching approaches are better specified and more powerful than equal-weighted approaches. Finally, we examine abnormal bond returns to acquirers around mergers and acquisitions to demonstrate how the abnormal return model and use of daily versus monthly data can affect inferences.
• Banyi, M. L., Dyl, E. A., & Kahle, K. M. (2008). Errors in estimating share repurchases. Journal of Corporate Finance, 14(4), 460-474.
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  Abstract: We examine the accuracy of various estimates of firms' repurchases of common stock used in earlier studies, and find high error rates in the most commonly used estimators. We also find that the procedure used to estimate open market share repurchases can significantly impact results. The Compustat-based measure, which is the most accurate, deviates from the actual number of shares repurchased by more than 30% in about 16% of the cases. We conclude that many studies should be revisited now that the SEC mandates disclosure of precise information about share repurchases in Forms 10-Q and 10-K. © 2008 Elsevier B.V. All rights reserved.
• Garfinkel, J. A., Kahle, K., & Shastri, K. (2007). Information, incentive alignment, and company loan financing of insider trades. FINANCIAL MANAGEMENT, 36(4), 67-87.
• Kahle, K. M., & Shastri, K. (2005). Firm performance, capital structure, and the tax benefits of employee stock options. Journal of Financial and Quantitative Analysis, 40(1), 135-160.
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  Abstract: This paper analyzes the relation between the capital structure of a firm and the tax benefits realized from the exercise of stock options. Theory suggests that firms with tax benefits from the exercise of stock options should carry less debt since tax benefits are a non-debt tax shield. We find that both long- and short-term debt ratios are negatively related to the size of tax benefits from option exercise. Moreover, one-year changes in long-term leverage are negatively related to changes in the number of options exercised. Such a relation does not exist for changes in short-term leverage. Finally, firms with option-related tax benefits tend to issue equity, with the net amount of equity issued an increasing function of these tax benefits.
• Clarke, J., Dunbar, C., & Kahle, K. (2004). The long-run performance of secondary equity issues: A test of the windows of opportunity hypothesis. Journal of Business, 77(3), 575-603.
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  Abstract: We examine long-run stock and operating performance following secondary equity offerings. For a subsample of issuers in which the seller is an insider, both 3- and 5-year post-issue abnormal stock returns are significantly negative. The findings are robust to alternative long-run abnormal return measurement methodologies. The abnormal returns are large relative to the initial market reaction (the mean 5-year abnormal returns is -33.33%). The operating performance of these firms also declines subsequent to the issue. This supports the hypothesis that the negative performance of secondary equity offerings can be attributed to managers exploiting "windows of opportunity" by issuing overvalued shares.
• Kahle, K. M., & Shastri, K. (2004). Executive loans. Journal of Financial and Quantitative Analysis, 39(4), 791-811.
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  Abstract: This paper analyzes the characteristics and impact of loans made to executives for stock purchase, option exercise, and relocation. We find that loans made to assist executives in purchasing stock or exercising options are larger and have higher interest rates than relocation loans, All types of loans, however, are issued at below-market interest rates, on average. We also find that while stock purchase loans are given to managers with low existing ownership, option exercise loans are given to managers with high existing ownership and high cash compensation. Finally, our results indicate that executive stock ownership increases following stock purchase and option exercise loans. For managers as a whole, a loan that enables a manager to buy 100 shares of stock results in only an eight-share increase in ownership. However, the relation between ownership changes and stock purchase loans is much stronger for low ownership managers.
• Kahle, K. M. (2002). When a buyback isn't a buyback: Open market repurchases and employee options. Journal of Financial Economics, 63(2), 235-261.
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  Abstract: This paper examines how stock options affect the decision to repurchase shares. Firms announce repurchases when executives have large numbers of options outstanding and when employees have large numbers of options currently exercisable. Once the decision to repurchase is made, the amount repurchased is positively related to total options exercisable by all employees but independent of managerial options. These results are consistent with managers repurchasing both to maximize their own wealth and to fund employee stock option exercises. The market appears to recognize this motive, however, and reacts less positively to repurchases announced by firms with high levels of nonmanagerial options. © 2002 Elsevier Science B.V. All rights reserved.
• Clarke, J., Dunbar, C., & Kahle, K. M. (2001). Long-run performance and insider trading in completed and canceled seasoned equity offerings. Journal of Financial and Quantitative Analysis, 36(4), 415-430.
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  Abstract: This paper provides evidence on managerial motives for raising equity by examining long-run performance and insider trading around canceled and completed seasoned equity offerings (SEOs). Insider selling increases prior to completed and canceled SEOs, but declines afterward only for canceled offerings. For completed SEOs, pre-filing insider trading is related to long-run performance after completion. For canceled SEOs, pre-filing insider trading is related to stock performance between filing and cancellation. Finally, changes in insider trading around SEO filing affect the probability of cancellation. Overall, the evidence is consistent with insiders exploiting windows of opportunity by attempting to issue overvalued equity and by canceling the issue when the market reaction to the announcement eliminates the overvaluation.
• Kahle, K. M. (2000). Insider trading and the long-run performance of new security issues. Journal of Corporate Finance, 6(1), 25-53.
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  Abstract: This paper uses insider trading around new security issues to provide evidence of managerial timing ability. I show that insider sales increase and purchases decrease prior to issues of information-sensitive securities (convertible debt and equity) by industrial firms. I then examine the relation between insider trading and subsequent stock returns. Although not all equity issues are motivated by overvaluation, those where managers sell prior to the issue are more likely to be. I find that industrial firms with abnormal insider selling underperform in the long run, whereas those with abnormal buying do not. There is no evidence of a relation between abnormal selling and future performance for utility offerings, however. Overall, the evidence is consistent with poor long-term performance being due to overvaluation.
• Kahle, K. M., & Walkling, R. A. (1996). The impact of industry classifications on financial research. Journal of Financial and Quantitative Analysis, 31(3), 309-335.
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  Abstract: Using approximately 10,000 firms jointly covered by Compustat and CRSP from 1974-1993, we find substantial differences in the SIC codes designated by the two databases. More than 36 percent of the classifications disagree at the two-digit level and nearly 80 percent disagree at the four-digit level. We examine the impact of these differences upon financial research in several ways. First, we show that the classification of utilities, financial firms, and conglomerate acquisitions are affected by the choice of CRSP vs. Compustat SIC codes. Second, we show that industry classification matters in financial research by illustrating that size- and industry-matched comparisons are more powerful than pure size matches. Third, we test the specification and power of Compustat vs. CRSP classifications by simulating a typical financial experiment in which sample firms are matched to control firms by industry. We find that: i) Compustat matched samples are more powerful than CRSP matched samples in detecting abnormal performance; ii) nonparametric tests outperform parametric tests; and iii) four-digit SIC code matches are more powerful than two-digit SIC code matches. These results are robust to the inclusion or exclusion of extreme values, and hold for both NYSE/AMEX and Nasdaq firms.

Presentations

• Kahle, K. M. (2022, Fall). How Deep Is the Labor Market for Female Directors? Evidence from Mandated Director Appointments. Invited presentation at Penn State - Harrisburg. Zoom.
• Kahle, K. M. (2021, Fall). How Deep Is the Labor Market for Female Directors? Evidence from California’s Board Gender Diversity Mandate. Invited presentation - Oklahoma State University. Zoom presentation: Oklahoma State University.
• Kahle, K. M., Zhao, W., & Intintoli, V. (2016, Fall 2016). Director Connectedness: Monitoring Efficacy and Career Prospects. Invited Seminar - Iowa State University.
• Kahle, K. M. (2020, Fall). How Deep Is the Labor Market for Female Directors? Evidence from California’s Board Gender Diversity Mandate. Invited presentation - Australian National University. Zoom presentation: Deakin University.
• Kahle, K. M. (2020, Fall). How Deep Is the Labor Market for Female Directors? Evidence from California’s Board Gender Diversity Mandate. Invited presentation - Deakin University. Zoom presentation: Deakin University.
• Kahle, K. M. (2019, November). Are Corporate Payouts Abnormally High in the 2000s?. Invited seminar - University of Nevada, Las Vegas.
• Kahle, K. M. (2019, September). Are Corporate Payouts Abnormally High in the 2000s?. Invited seminar - University of Waterloo.
• Kahle, K. M. (2019, September). Are Corporate Payouts Abnormally High in the 2000s?. Invited seminar - University of Wyoming.
• Kahle, K. M. (2018, October). The Evolution of Employee Compensation, Dilution, and Payout Policy. Invited presentation - Clemson UniversityClemson University.
• Kahle, K. M., Bonaime, A., Nemani, A. K., & Moore, D. (2018, June 2018). The Evolution of Employee Compensation, Dilution, and Share Buybacks. Eramus Executive Compensation Conference 2018. Eramus University.
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  Paper was accepted to be presented at the conference.
• Nemani, A., Moore, D., Kahle, K. M., & Bonaime, A. (2018, October). The Evolution of Employee Compensation, Dilution, and Share Buybacks. Financial Management Association.
• Kahle, K. M. (2017, September 2017). The Evolution of Employee Compensation, Dilution, and Share Buybacks. Invited presentation - Miami University.
• Kahle, K. M. (2015, Summer 2015). Board Connectedness and Board Effectiveness. American Accounting Association.
• Kahle, K. M., & Williams, R. M. (2015, April). The Impact of the Crisis on Payout Policy. Invited seminar - Singapore Management University. Singapore Management University.
• Kahle, K. M., & Williams, R. M. (2015, April). The Impact of the Crisis on Payout Policy. Invited seminar - West Virginia. West Virginia University.
• Kahle, K. M., Intintoli, V., & Zhao, W. (2015, December). Director Connectedness, Career Concerns, and Monitoring Efficacy. 28th Australasian Banking and Finance ConferenceUniversity of New South Wales.
• Kahle, K. M., Intintoli, V., & Zhao, W. (2015, May). Board Connectedness and Board Effectiveness. Invited Seminar - NUS. National University of Singapore.
• Kahle, K. M., Intintoli, V., & Zhao, W. (2015, May). Board Connectedness and Board Effectiveness. Invited Seminar - Nanyang University. Nanyang Technological University.
• Kahle, K. M. (2012, March 2012). Declining Propensity to Pay? A Re-examination of the Life Cycle Theory. Invited seminar - Texas A&M. Texas A&M.