
Dominic Chai, S.J., Ph.D.
Associate Dean for Strategy and Mission, College of Business Administration Loyola Marymount University
- Los Angeles CA
Biography
Education
Boston College
S.T.L.
Systematic Theology
2025
Loyola University Chicago
M.A.
Theological Studies
2020
London School of Economics and Political Science (LSE)
Ph.D.
Management
2009
London School of Economics and Political Science (LSE)
M.Sc.
International Political Economy
2003
University of California, Berkeley
B.A.
Political Science
2002
Social
Areas of Expertise
Industry Expertise
Articles
Environmental transparency and investors' risk perception: Cross‐country evidence on multinational corporations' sustainability practices and cost of equity
Business Strategy and the Environment, 2021-12, Vol.30 (8), p.3975-4000E. P. Yu, A. Tanda, B. V. Luu & D. H. Chai
2021-12-01
We explore whether a greater amount of environmental disclosure can reduce a firm's ex ante cost of equity. This could occur because the quantity of environmental information changes investors' risk perception of the company, thereby influencing its ex ante cost of equity. Our study is a cross‐country analysis of 1481 multinational corporations (MNCs) across 43 countries and territories from 2013 to 2019. Firstly, we measure investors' risk perception as a firm's ex ante cost of equity by employing five different valuation models, all based on equity analysts' forecasted data. We then investigate whether large quantities of environmental information disclosed by an MNC affect its ex ante cost of equity. We find evidence that investors price the amount of environmental disclosure. More environmental disclosure decreases a firm's ex ante cost of equity because it lessens investors' information asymmetry. However, this relationship is non‐linear. Once the amount of environmental disclosure data exceeds a certain threshold level, a firm's ex ante cost of equity will rise again. Our empirical results also suggest that non‐financial factors at the country level play a role in shaping how investors perceive a firm's riskiness. Locating the firm in a country with better environmental performance and a higher score of the human development index can reduce investors' risk perception and result in a lower ex ante cost of equity. A policy implication of our findings is that a global standardised and effective corporate sustainability reporting is needed to provide investors a more holistic view for evaluating the riskiness of their investments.
Unexpected corporate outcomes from hedge fund activism in Japan
Socio-Economic Review, 2020-01, Vol.18 (1), p.31-52J. Buchanan, D. H. Chai & S. Deakin
2020-01-01
Abstract Hedge fund activism has been identified in the USA as a driver of enduring corporate governance change and market perception. We investigate this claim in an empirical study to see whether activism produced similar results in Japan in four representative areas: management effectiveness, managerial decisions, labour management and market perception. Experience from the USA would predict positive changes at Japanese target companies in these four areas. However, analysis of financial data shows that no enduring changes were apparent in the first three areas, and that market perception was consistently unfavourable. Our findings demonstrate that the same pressures need not produce the same results in different markets. Moreover, while the effects of the global financial crisis should not be ignored, we conclude that the country-level differences in corporate governance identified in the varieties of capitalism literature are robust, at least in the short term.
Taking a Horse to Water? Prospects for the Japanese Corporate Governance Code
Journal of Japanese Law, 2019-05, Vol.47, p.69-108J. Buchanan, D. H. Chai & S. Deakin
2019-05-01
In 2014–2015 Japan implemented a series of reforms to its corporate governance regime. The principal measures adopted were the country’s first Corporate Governance Code, revisions to its Companies Law, and a Stewardship Code, together with a report (the Itō Review) on corporate competitiveness and incentives for growth. We frame our analysis by a consideration of what institutional theory has to say about the relationship between formal and informal norms and practices. We then examine the manner in which the current reforms were devised and implemented, their content, and the influences that shaped them. We suggest that despite a pattern of embedded institutions resisting regulatory pressures for change in recent years, Japanese corporate governance may now have reached one of its historical turning points. The introduction into Japan of the “comply or explain” approach, the major innovation that distinguishes this reform exercise, is a significant moment. The Stewardship Code has the potential to co-opt institutional investors’ interests to the economic reform agenda of the political class. At the same time, there are potential obstacles to unqualified adoption of the Corporate Governance Code, especially for smaller companies that lack administrative resources. Moreover, some doubt remains regarding the ability of corporate governance reforms to deliver the kind of economic revival that politicians are seeking. Thus the question of whether the Corporate Governance Code will bring about lasting change in Japanese corporate practice remains an open one.
Agency Theory in Practice: a Qualitative Study of Hedge Fund Activism in Japan
Corporate Governance : An International Review, 2014-07, Vol.22 (4), p.296-311J. Buchanan, D. H. Chai & S. Deakin
2014-07-01
Manuscript Type Empirical Research Question/Issue We look at the reaction to hedge fund activism of managers and shareholders in Japanese firms and explore the implications of our findings for agency theory. Research Findings/Insights Confrontational shareholder activism of the kind practiced by American and British hedge funds in Japan during the 2000s failed to gain acceptance from Japanese investors and managers or to alter the internal focus of corporate governance practices in Japanese firms. Theoretical/Academic Implications We use a qualitative research design which treats the standard agency‐theoretical model of the firm as only one possible approach to understanding corporate governance, to be tested through empirical research, rather than as an assumption built into the analysis. We find that Japanese managers do not generally regard themselves as the shareholders' agents and that, conversely, shareholders in Japanese firms do not generally behave as principals. Our findings suggest that the standard principal‐agent model may be a weak fit for firms in certain national contexts. Practitioner/Policy Implications For policymakers, our work demonstrates the importance of understanding the distinctive features of national‐level corporate governance arrangements. For practitioners, it cautions against the view that national corporate governance systems are converging around the model of shareholder primacy and directs attention to the need for investors to be informed of the diversity of practices across different countries.
Empirical analysis of legal institutions and institutional change: multiple-methods approaches and their application to corporate governance research
Journal of Institutional Economics, 2014-03, Vol.10 (1), p.1-20J. Buchanan, D. H. Chai & S. Deakin
2014-03-01
The claim that institutions matter for economic growth and development has so far received a more extensive theoretical treatment than an empirical or methodological one. Basing our approach on a coevolutionary conception of relations between law and the economy, we link theory to method and explore three techniques for analysing legal institutions empirically: ‘leximetric’ measurement of legal rules, time-series econometrics and interview-based fieldwork. We argue that while robust measurement of institutions is possible, quantitative techniques have their limits, and should be combined with fieldwork in a multiple-methods approach.