Research Questions On Board Network Assessment Answer

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Question :

Questions must answer.

1. Can you briefly summarize your research topic?

2.Why you chose this topic? Why board network?

3.How you measure board social network? Which program to use? Any examples?

4.What is the theoretical background of the research?

5.What are the mechanisms underlying the association between board network and tail risk?

6.What is tail risk? Have you checked on the available measures?

7.What are the differences between tail risk and firm risk taking? 

8.How can you position your research in corporate governance literature?

9.What is the contribution of the research?

10.Which methodology are you going to use?

11.How do you perform that by using software?

12.What is the key literature of this research? Can you summarise it?

13.What do you think about that paper?

14.What is the most recent research project that you did? Can you describe some?

15.What are your strengths and weakness?

16.What do you want from a PhD program? What a PhD can help you?

17.Where do you see yourself after your PhD?

18.Do you know Stata or use Stata before? (same for Python, R, Matlab,…)

19.What do you think about future research? Where can we continue to develop?

20.What do you think about endogeneity issue?

21.What is agency theory? Resources dependence theory?

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Answer :

1. Can you briefly summarize your research topic?

This study focuses on research of social networks and its role in the banking systems by investigating the characteristics of how well-connected the members of the boards are, and by analyzing its empirical relation with various firms’ decision-makings, thus defining the ultimate shareholder’s value.

Networks influence many decisions such as hiring, firing, retention, raising finance, stock prices etc. This network becomes even more complex for those in the banking industry, one of the main creditors of the economy.

A director’s network is leveraged for a company’s business and may have positive and negative impacts on the company. For example, the political connection of independent directors may help firms to obtain loans easily and be more confident in the legal system to an extent that will affect the competitive market and may create the bad debts in the credit system if the firm does not perform well in the future (Li, Hongbin, et al. 2008). 

2. Why you chose this topic? Why board network?

The available research on the board focuses on identity of board members, the size of the board, and the independence of individuals on the board. Previous studies, such as the one conducted by Pathon (2009), only focused on costly risks and other accounting measures of risk taking, such as liquidity and credit risk.

Apart from focusing on the value of networking of board members, this study will, instead, consider tail-risk which is used to measure the excessive risk, thus help provide a complete picture of the firm’s expected shortfall.

3. How you measure board social network? Which program to use? Any examples?

This study will explore the impact of board network on bank’s tail risk and firm value by covering the UK-based banks. The research will take on the form of quantitative analysis using multiple regression techniques.

4. What is the theoretical background of the research?

This study focuses on impact of board member’s networking on firm’s value and tail risk. The research has been undertaken as the available literature on the related topics reveals a gap whereby minimal research could be found relating board’s network impact on tail risk or firm value. The available literature on board is abundant but pertains mainly to identity, size of the board or independence of members. Networking is a new perspective. Given the strength and growth of Social network in current times, it is imperative to study the impact of same so as to improve effectiveness of a bank.

5. What are the mechanisms underlying the association between board network and tail risk?

  • Board networks will include three types of social ties: university ties, professional ties, and regional ties. Board network will be divided into various ties, and it will be examined from two distinct perspectives which are density and external social capital. Board network density will be defined as the extensiveness of the contacts among the board directors. Board social capital will be understood as the degree to which board members have outside contacts in the external environment.
  • Tail risk will be defined as “the risk that an investment will change by more than three standard deviations from its mean” (Bushman et al., 2018, p. 192). The hypothesis to be checked is whether banks with greater board network characteristics exhibit lower tail risk.
  • The data pertaining to bank board members’ networks will be compared to each bank’s stock reports to determine Tail Risk. 

6. What is tail risk? Have you checked on the available measures?

Tail risk will be defined as “the risk that an investment will change by more than three standard deviations from its mean” (Bushman et al., 2018, p. 192).

The data from the stock reports will be analyzed over a one-year period to see if it deviates more than three standard deviations. The data will be analyzed statistically via Eviews software to conduct multiple regression analysis to determine the relationship between the independent and dependent variables (Quinlan et al., 2019). 

7. What are the differences between tail risk and firm risk taking? 

Tail risk is a form of portfolio risk that arises when a possibility that investment will move more than three standard deviations from mean is greater than what is shown by normal distribution.

On the other hand, firm risk taking is related to a particular organization only where it pertains to projects undertaken, leverage in capital structure etc.

8. How can you position your research in corporate governance literature?

Available literature suggests that in order to improve effectiveness and competitive advantage, a bank should improve the effectiveness of the board and corporate governance. Hence, corporate governance is an important area which deals with the various governance arrangements used to control the corporation within the objective of maximizing shareholders (owners) wealth. At the same time, the classic literature review reveals agency problem due to conflict of interest between shareholders and the management. Separation of control between ownership and management leads to information asymmetry between them. In turn, information asymmetry creates moral hazard and adverse selection problems that result in agency costs (Jensen and Meckling, 1976).

This study contributes to the existing literature of corporate governance and banking risk management by exploring the impact of board network on bank’s tail risk and firm value. Apart from being a fresh take on the topic, the subject research study also contributes towards improving effectiveness of the board through networking and hence, relates to corporate governance.

9. What is the contribution of the research?

This study will explore the impact of board network on bank’s tail risk and firm value by covering the UK-based banks. I believe this is the first of its kind research in the area as till date; board-related research has been limited to identity, size of the board or independence of the members. Networking influence is a new perspective.

Also, most of the available research has focused on costly risks and other accounting measures of risk taking, such as liquidity and credit risk. Tail risk is also a new take for analyzing the risk management.

While there are a limited number of studies that explore the effect of board networks on FV, there is no comprehensive study on board networks and tail risk. Moreover, these variables and relationships have not been studied within a UK setting, nor have they focused on the banking sector.

10. Which methodology are you going to use?

The research will take on the form of quantitative analysis using multiple regression techniques. Data will be collected through various databases such as, BoardEx, Bloomberg, DataStream, FAME, Annual reports etc. 

  • Board networks will include three types of social ties: university ties, professional ties, and regional ties. 
  • Firm value (FV) will be defined as “an economic concept that reflects the value of a business, which is the value that a business is worthy of at a particular date or theoretically the amount that one needs to pay to buy/take over a business entity” (Vafeas & Vlittis, 2019,p. 61). It will be calculated through Enterprise Value method. The hypothesis to be checked is whether banks with greater board network characteristics exhibit better FV.
  • Tail risk will be defined as “the risk that an investment will change by more than three standard deviations from its mean” (Bushman et al., 2018, p. 192). The hypothesis to be checked is whether banks with greater board network characteristics exhibit lower tail risk.

11. How do you perform that by using software?

The research will take on the form of quantitative analysis using multiple regression techniques. Data will be collected through various databases such as, BoardEx, Bloomberg, DataStream, FAME, Annual reports etc. 

12. What is the key literature of this research? Can you summarise it?

The key literature relates to discussion of available data on corporate governance, improving efficiency of the banks and how board effectiveness performs a role in the same. Various parameters related to board have been discussed as to whether they have an impact on organizational performance or not. Further, the impact on risk management is also discussed. Then, the discussion on importance of networking and impact of director’s networking has been done. It also reveals a gap where network’s impact on firm value or tail risk has not been discussed in available literature. 

13. What do you think about that paper?

As mentioned earlier, I believe this paper is the first of its kind of research as it involves analyzing impact of board network on bank’s tail risk and firm value by covering the UK-based banks. Till date; majority of board-related research has been limited to identity, size of the board or independence of the members. While there are a limited number of studies that explore the effect of board networks on FV, there is no comprehensive study on board networks and tail risk. Networking influence is a new perspective.

Also, most of the available research has focused on costly risks and other accounting measures of risk taking, such as liquidity and credit risk. Tail risk is also a new take for analyzing the risk management.

14. What is the most recent research project that you did? Can you describe some?

15. What are your strengths and weakness?

16. What do you want from a PhD program? What a PhD can help you?

17. Where do you see yourself after your PhD?

18. Do you know Stata or use Stata before? (same for Python, R, Matlab,…)

19. What do you think about future research? Where can we continue to develop?

20. What do you think about endogeneity issue?

It indicates a situation where an explanatory variable is correlated with the error term. This can be solved through instrumental variables techniques, such as two stage least squares. 

21. What is agency theory? Resources dependence theory?

Popularly called principal-agent problem, agency theory refers to a situation when a person can take decisions on behalf of another person such that that person will be impacted. For example, a company can take decisions on behalf of its shareholders even if these decisions impact the shareholders adversely. This impact is called agency costs.

Resources dependence theory explains how procurement of external resources impacts the behavior of the organization. The organization may be at disadvantage due to scarcity of resources, non-cooperative attitude of such resource providers etc. Hence, it must come up with strategies to increase its bargaining power and ensure supply of resources.