Business PhD Spotlight: Ke Feng

PhD candidate Ke Feng explores corporate governance disclosure and the information environment in financial markets. His journey began in the public accounting sector, working as an audit associate at a Big Four accounting firm. This experience sparked his interest in how accounting information is designed and used across different jurisdictions.

 "Accounting is the lingua franca of the business world. It provides an interface to communicate private information to the public," says Feng. "I enjoy providing explanations to economic phenomena. The reasoning should be intuitive, but has often been missing from the discussion."

Feng's thesis focuses on corporate governance, specifically shareholder voting. He examines how shareholders make collective decisions on governance issues, considering the costs of acquiring information and the common practice of individual shareholders processing partial information before casting their votes.

"Managers' disclosure is an important source of information. They anticipate how shareholders process and interpret information, and then design their disclosure strategically. My first research question is whether managers can influence voting results by controlling the amount of information they disclose," Feng explains.

His findings reveal that managers indeed have this capability, as shareholders tend to vote as if they are the pivotal voters, considering not only their individual information but also their peers' potential observations. Although managers disclose fairly, shareholders bias their observation towards the pivotal condition.

The concept of the pivotal voter — the person who can alter the outcome of an election — plays a crucial role in Feng's research. In a simple majority rule voting, the pivotal voter breaks the tie if other voters are evenly split.

Feng's second research question extends to the role of proxy advisory firms, which provide voting recommendations to institutional investors. He proposes that these firms strategically cover certain stock issuers, seeking opportunities to challenge shareholders' prior beliefs. This contradiction between recommendations and prior beliefs often prompts shareholders to conduct further individual research.

"Understanding the role of proxy advisory firms is crucial to evaluate their influence on voting results," Feng states. "My work offers a new perspective that proxy advisory firms don't always replace shareholders' efforts in conducting individual research. Instead, they sometimes introduce controversies and highlight nuances in proxy statements."

Feng's research contributes to a deeper understanding of information acquisition and decision-making processes in corporate governance. By bridging theoretical models with practical insights, his work promises to shed light on the complex interactions between managers, shareholders, and proxy advisory firms.