Sandy J Klasa

Interests

Research

Corporate financeCorporate governanceMergers and acquisitionsInteraction of financial policy decisions with product market competitionInteraction of financial policy decisions with labor market frictions

Teaching

Corporate financeFinancial managementEntrepreneurial finance

Courses

Scholarly Contributions

Journals/Publications

• Klasa, S. J., Fathollahi, M., & Harford, J. (2022). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. Journal of Financial Economics.
• Cardella, L., Fairhurst, D., & Klasa, S. J. (2021). What determines the composition of a firm's cash reserves?. Journal of Corporate Finance, 68.
• Klasa, S. J., & Heitzman, S. (2021). Informed Trading Reactions to New Private Information: Evidence from Nonpublic Merger Negotiations. Management Science.
• Klasa, S. J., Ortiz-Molina, H., Serfling, M., & Srinivisan, S. (2018). The protection of trade secrets and capital structure decisions. Journal of Financial Economics, 128(2), 21. doi:https://doi.org/10.1016/j.jfineco.2018.02.008
• Cadman, B. D., Campbell, J. L., & Klasa, S. J. (2016). Are Ex-Ante CEO Severance Pay Contracts Consistent with Efficient Contracting?. Journal of Financial and Quantitative Analysis, 51(3), 707-735.
• Klasa, S. J., Harford, J., & Maxwell, W. F. (2014). Refinancing Risk and Cash Holdings. Journal of Finance, 69(3), 975-2012.
• Klasa, S., Ali, A., & Yeung, E. (2014). Industry Concentration and Corporate Disclosure Policy. Journal of Accounting and Economics, 58(2), 240-264.
• Hui, K. W., Klasa, S., & Yeung, P. E. (2012). Corporate suppliers and customers and accounting conservatism. Journal of Accounting and Economics, 53(1-2), 115-135.
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  Abstract: We argue that a firm's suppliers and customers prefer it to account more conservatively due to information asymmetry and these stakeholders' asymmetric payoffs with respect to the firm's performance. We predict that a firm meets this demand for accounting conservatism when suppliers or customers have bargaining advantages over it that enable them to dictate terms of trade or whether trade occurs at all. We show that when a firm's suppliers or customers have greater bargaining power, the firm recognizes losses more quickly. Our findings provide insights into how a firm's powerful suppliers and customers are associated with its accounting practices and also support the contracting explanation for accounting conservatism. © 2011.
• Cadman, B., Klasa, S., & Matsunaga, S. (2010). Determinants of CEO Pay: A comparison of ExecuComp and non-ExecuComp firms. Accounting Review, 85(5), 1511-1543.
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  Abstract: We document that firms included in the ExecuComp database tend to be larger, more complex, followed by more analysts, have greater stock liquidity levels, and have higher total, but less concentrated, institutional ownership than other firms. Based on these differences, we test and find support for three predictions. First, ExecuComp firms rely more heavily on earnings and stock returns in determining CEO cash compensation. Second, the weight on earnings is more sensitive to differences in the extent of growth opportunities for ExecuComp firms. Third, the positive relation between institutional ownership concentration and the value of stock option grants is stronger for ExecuComp firms. Overall, our results suggest that ExecuComp and nonExecuComp firms operate in different contracting environments that lead to differences in the design of their executive compensation contracts. As a result, care should be taken in extending results based on ExecuComp samples to non-ExecuComp firms.
• Ali, A., Klasa, S., & Yeung, E. (2009). The limitations of industry concentration measures constructed with compustat data: Implications for finance research. Review of Financial Studies, 22(10), 3839-3871.
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  Abstract: Industry concentration measures calculated with Compustat data, which cover only the public firms in an industry, are poor proxies for actual industry concentration. These measures have correlations of only 13 with the corresponding U.S. Census measures, which are based on all public and private firms in an industry. Also, only when U.S. Census measures are used is there evidence consistent with theoretical predictions that more-concentrated industries, which should be more oligopolistic, are populated by larger and fewer firms with higher price-cost margins. Further, the significant relations of Compustat-based industry concentration measures with the dependent variables of several important prior studies are not obtained when U.S. Census measures are used. One of the reasons for this occurrence is that Compustat-based measures proxy for industry decline. Overall, our results indicate that product markets research that uses Compustat-based industry concentration measures may lead to incorrect conclusions.
• Harford, J., Klasa, S., & Walcott, N. (2009). Do firms have leverage targets? Evidence from acquisitions. Journal of Financial Economics, 93(1), 1-14.
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  Abstract: In the context of large acquisitions, we provide evidence on whether firms have target capital structures. We examine how deviations from these targets affect how bidders choose to finance acquisitions and how they adjust their capital structure following the acquisitions. We show that when a bidder's leverage is over its target level, it is less likely to finance the acquisition with debt and more likely to finance the acquisition with equity. Also, we find a positive association between the merger-induced changes in target and actual leverage, and we show that bidders incorporate more than two-thirds of the change to the merged firm's new target leverage. Following debt-financed acquisitions, managers actively move the firm back to its target leverage, reversing more than 75% of the acquisition's leverage effect within five years. Overall, our results are consistent with a model of capital structure that includes a target level and adjustment costs. © 2009 Elsevier B.V. All rights reserved.
• Klasa, S., Maxwell, W. F., & Ortiz-Molina, H. (2009). The strategic use of corporate cash holdings in collective bargaining with labor unions. Journal of Financial Economics, 92(3), 421-442.
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  Abstract: We provide evidence that firms in more unionized industries strategically hold less cash to gain bargaining advantages over labor unions and shelter corporate income from their demands. Specifically, we show that corporate cash holdings are negatively related with unionization. We also find that this relation is stronger for firms that are likely to place a higher value on gaining a bargaining advantage over unions and weaker for those firms in which lower cash holdings provide less credible evidence that a firm is unable to concede to union demands. Additionally, we show that for unionized firms increases in cash holdings raise the probability of a strike. Finally, we show that unionization decreases the market value of a dollar of cash holdings. Overall, our findings indicate that firms trade-off the benefits of corporate cash holdings with the costs resulting from a weaker bargaining position with labor. © 2009 Elsevier B.V. All rights reserved.
• Ali, A., Klasa, S., & Li, O. Z. (2008). Institutional stakeholdings and better-informed traders at earnings announcements. Journal of Accounting and Economics, 46(1), 47-61.
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  Abstract: Utama and Cready [Utama, S., Cready, W.M., 1997. Institutional ownership, differential predisclosure precision and trading volume at announcement dates. Journal of Accounting and Economics 24, 129-150] use total institutional ownership to proxy for the proportion of better-informed traders, an important determinant of trading around earnings announcements. We argue that institutions holding small stakes cannot justify the fixed cost of developing private predisclosure information. Also, institutions with large stakes generally do not trade around earnings announcements since they are dedicated investors or face regulations that make informed trading difficult. However, institutions holding medium stakes have incentives to develop private predisclosure information and trade on it; we show that their ownership is a finer proxy for the proportion of better-informed traders at earnings announcements. © 2008 Elsevier B.V. All rights reserved.
• Haushalter, D., Klasa, S., & Maxwell, W. F. (2007). The influence of product market dynamics on a firm's cash holdings and hedging behavior. Journal of Financial Economics, 84(3), 797-825.
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  Abstract: Prior work suggests that if a firm shares a larger proportion of its growth opportunities with rivals, an inability to fully invest in these opportunities leads to predatory behavior on the part of rivals and losses in market share. We examine whether firms manage this predation risk. We find inter- and intra-industry evidence that the extent of the interdependence of a firm's investment opportunities with rivals is positively associated with its use of derivatives and the size of its cash holdings. Moreover, an analysis of investment behavior provides evidence that if this interdependence is high, the management of predation risk provides strategic benefits. Our results indicate that predation risk is an important determinant of corporate financial policy choices and investment behavior. © 2007 Elsevier B.V. All rights reserved.
• Klasa, S. (2007). Why do controlling families of public firms sell their remaining ownership stake?. Journal of Financial and Quantitative Analysis, 42(2), 339-368.
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  Abstract: I investigate what leads controlling families of publicly traded firms to sell their remaining ownership stake. The sale of a controlling stake is best explained in the context of theories of the firm related to optimal risk bearing, the separation of ownership and management expertise, the CEO succession process, and the monitoring provided by outside blockholders. A timing explanation is only marginally supported. The sale of a controlling stake is not explained by insufficient financial resources to fully invest in growth opportunities. This study offers insights into the final stage of the process in which entrepreneurs sequentially sell their firm to outside parties and also identifies the nature of costs of concentrated ownership. COPYRIGHT 2007, SCHOOL OF BUSINESS ADMINISTRATION, UNIVERSITY OF WASHINGTON.
• Klasa, S., & Stegemoller, M. (2007). Takeover activity as a response to time-varying changes in investment opportunity sets: Evidence from takeover sequences. Financial Management, 36(2), 19-43.
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  Abstract: We study takeover sequences that contain at least five acquisitions made over a period greater than 12 months, with no two acquisitions separated by more than 24 months. Acquisitions made within such sequences represent more than a quarter of aggregate takeover activity by U.S. public firms from 1982-1999. Our findings are consistent with a proposition that takeover sequences occur in the. context of time-varying changes in an acquirer's growth opportunity set. Takeover sequences begin (end) subsequent to an expansion (contraction) of this opportunity set.

Presentations

• Klasa, S. J. (2023, Fall). Temporary workers and corporate liquidity management decisions. York University - Invited Research Presentation.
• Klasa, S. J. (2023, Spring). Employee flight risk and capital structure decisions. HEC-Montreal - Invited Research Presentation.
• Klasa, S. J. (2023, Spring). Employee flight risk and capital structure decisions. Louisiana State University - Invited Research Presentation.
• Klasa, S. J. (2022, Fall). Discussion of “Classified boards: Endangered species or "hiding in plain sight”. Australasian Finance and Banking Conference - Paper Discussant.
• Klasa, S. J. (2022, Fall). Discussion of “Does Labor Share Affect Cash Holdings”. New Zealand Finance Meeting - Paper Discussant.
• Klasa, S. J. (2022, Fall). Temporary workers and cash holdings. Australasian Finance and Banking Conference - Paper Presentation.
• Klasa, S. J. (2022, Fall). Temporary workers and cash holdings. New Zealand Finance Meeting - Paper Presentation.
• Klasa, S. J. (2022, Spring). The impact of robot penetration on local government public financing. University of Arkansas - Invited Research Presentation.
• Klasa, S. J. (2022, Spring). The impact of robot penetration on local government public financing. University of North Texas - Invited Research Presentation.
• Klasa, S. J., Lim, H., Moon, K., & Hahn, J. (2020, November). Temporary Workers and Cash Holdings. University of Oklahoma - Invited Research Presentation. University of Oklahoma: University of Oklahoma.
• Klasa, S. J., Moon, K., Lim, H., & Hahn, J. (2020, October). Temporary Workers and Cash Holdings. University of Nevada at Las Vegas - Invited Research Presentation. University of Nevada at Las Vegas: University of Nevada at Las Vegas.
• Klasa, S. J. (2019, Fall). Discussion of “Network Effects in Corporate Financial Policies”. Finance, Organizations, and Markets Conference - University of Southern California - Paper discussant.
• Klasa, S. J. (2019, Fall). Discussion of “Ownership Networks and Earnings Inequality”. Uandes Corporate Finance Conference - Paper discussant.
• Klasa, S. J. (2019, Fall). Temporary workers and cash holdings. Uandes Corporate Finance Conference - Invited paper presentation.
• Klasa, S. J. (2019, Spring). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. Australian National University - Invited research seminar.
• Klasa, S. J. (2019, Spring). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. University of New South Wales - Invited research seminar.
• Klasa, S. J. (2019, Spring). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. University of Sydney - Invited research seminar.
• Klasa, S. J. (2019, Spring). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. University of Technology Sydney - Invited research seminar.
• Klasa, S. J., Harford, J., & Fathollahi, M. (2018, Fall 2018). Anticompetitive effects of horizontal acquisitions: the impact of within-industry product similarity. University of Alabama - Invited research seminar. Alabama: University of Alabama.
• Klasa, S. J. (2016, Sprin). Protection of Trade Secrets and Capital Structure Decisions - Northeastern University - Invited Research Seminar. Northeastern University - Invited Research Seminar.
• Klasa, S. J. (2015, April). What Determines The Composition of a Firm's Total Cash Reserves? - University of Exeter, U.K. - Invited Research Seminar. University of Exter, U.K. - Invited Research Seminar.
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  University of Exeter, U.K. - Invited Research Seminar
• Klasa, S. J. (2015, April). What Determines the Composition of a Firm's Total Cash Reserves - University of Bristol, U.K. - Invited Research Seminar. University of Bristol, U.K. - Invited Research Seminar.
• Klasa, S. J. (2015, August). Paper Discussion. European Finance Association Conference.
• Klasa, S. J. (2015, January). What Determines the Composition of a Firm's Total Cash Reserves? - University of Nebraska - Invited Research Seminar. University of Nebraska - Invited Research Seminar.
• Klasa, S. J. (2015, June). Protection of Trade Secrets and Capital Structure Decisions - Presented at the Western Finance Association Conference. Western Finance Association Conference.
• Klasa, S. J. (2015, June). Protection of Trade Secrets and Capital Structure Decisions - University of Sydney - Invited Reseearch Seminar. University of Sydney - Invited Research Seminar.
• Klasa, S. J. (2015, June). The Protection of Trade Secrets and Capital Structure Decisions - University of New South Wales - Invited Research Seminar. University of New South Wales - Invited Reseach Seminar.
• Klasa, S. J. (2015, March). Protection of Trade Secrets and Capital Structure Decisions - Presented at the European Winter Finance Summit Conference. European Winter Finance Summit Conference.
• Klasa, S. J. (2014, Fall). Protection of Trade Secrets and Capital Structure Decisions - Universidad de Los Andes, Chile - Invited research seminar. Universidad de Los Andes, Chile - Invited research seminar.
• Klasa, S. J. (2014, Fall). What Determines the Composition of a Firm’s Total Cash Reserves? - University of Oklahoma - Invited research seminar. University of Oklahoma - Invited research seminar.
• Klasa, S. J. (2014, Summer). Protection of Trade Secrets and Capital Structure Decisions - Presented at the Financial Intermediation Research Society Conference. Financial Intermediation Research Society Conference.
• Klasa, S. J. (2014, Summer). Protection of Trade Secrets and Capital Structure Decisions - Presented at the University of Alberta Frontiers in Finance Conference (Invited presentation). University of Alberta Frontiers in Finance Conference (Invited presentation).
• Klasa, S. J. (2015, August). Protection of Trade Secrets and Capital Structure Decisions - Presented at the European Finance Association Conference. European Finance Association Conference.