Joanne (Juan) Chen
I am an Assistance Professor of Finance at Questrom School of Business, Boston University. I hold a Ph.D. in Finance From London School of Economics. I am a member of the Finance Theory Group. (Download CV. )
Research Interests:
Corporate Finance Theory
Corporate Governance
Entrepreneurial Finance
Email: joanchen@bu.edu
Office: 522F, Rafik B. Hariri Building,
595 Commonwealth Avenue,
Boston, MA 02215, USA
Working Papers
2022 Best Paper in Finance Theory on the Job Market, Runner-up, awarded by the Finance Theory Group
2023 Yihong Xia Best Paper Award at CICF
Abstract: I develop a dynamic agency model to investigate optimal managerial authority and its interaction with managerial compensation. The model shows that when hiring a manager, the principal delegates authority that is unresponsive to either the manager's outside options or the firm's recruitment costs, in contrast to promised compensation, which increases in both. Over time, both the manager's authority and his compensation rise after good performances and decline after bad realizations. Authority-performance sensitivity decreases as the manager's authority grows, resembling entrenchment. In contrast, pay-performance sensitivity increases with the manager's authority. If managerial authority can be adjusted only infrequently, the optimal contract may allow for self-dealing. Moreover, the model reveals that early-career luck plays a disproportionate role in determining the manager's authority and lifetime utility.
Presentations: EFA 2023 (scheduled), CICF 2023, WFA 2023, Paris December 2022, BU Economics Micro Theory workshop 2022, Finance Theory Webinar 2022, NFA 2022, Cambridge Corporate Finance Theory Symposium 2022, Finance Theory Group Summer Meeting 2022, SFS Cavalcade North America 2022, FMCG PhD Symposium, Queen Mary University of London, Northwestern University (Kellogg), UNC-Chapel Hill (Kenan-Flagler), Erasmus University Rotterdam, Boston University (Questrom), UT Dallas (Naveen Jindal), Warwick Business School, Copenhagen Business School, Shanghai Advanced Institute of Finance, University of Amsterdam, EWMES 2021, Toulouse School of Economics Brownbag, EFA Doctoral Tutorial 2021, World Finance Conference 2021, London School of Economics
Platform Enterprises: Financing, Investment, and Network Growth
Abstract: I develop a tractable micro-founded dynamic platform model featuring cross-group network effects. Networks are analogous to capital assets, and the platform enterprise invests in the networks by making subsidies to users. The paper characterizes the entrepreneur's optimal financing and investment strategies. The main findings are: 1) making highly aggressive subsidies by using up available funds is optimal; 2) per-transaction subsidies decrease as the network grows; 3) the platform with stronger network effects has a propensity to make more subsidies at initial stages; 4) staged financing mitigates the limited enforcement problem, and ceteris paribus, the number of funding rounds decreases with the profitability of the platform and increases with required profits by financiers; 5) the value of funds raised each round increases and the financing frequency decreases over time.
Presentations: Owners as Strategists Conference 2022, FMA 2020, AFA poster 2020, KWC Conference in Entrepreneurial Finance , London Schoool of Economics
Work in Progress
Corporate Governance Time Bombs, with Martin Oehmke (Draft available upon request)
Why are “corporate time bombs’’ (festering problems that can lead to extreme losses for a firm) often kept unsolved? We show that, if the manager’s tenure is uncertain, it can be optimal to provide only low-powered incentives to defuse corporate time bombs, so that procrastination is a rational response. If the problem remains unsolved after the incumbent manager’s departure, incentives given to successive managers to defuse the time bomb are even lower, due to the principal’s belief updating. The model implies that time bombs have to be defused within a certain time frame and shows that frequent managerial turnover leads to missed opportunities for solving the problem.
Presentations: Yale Junior Finance Conference 2023 (Scheduled), WFA-ECWCF 2023, BU Questrom Brownbag 2023
Teaching
Boston University:
Lecturer: FE449 Corporate Financial Management
London School of Economics (2016-2022):
Class Teacher: FM250 Finance
Class Teacher: FM101 Finance
Class Teacher: FM212 Principles of Finance
Teaching Assistant: FM421 Applied Corporate Finance
Teaching Assistant: FM422 Corporate Finance
Teaching Assistant: FM445 Portfolio Management
Conference Discussions
Externalities of Responsible Investments
By Michele Bisceglia, Alessio Piccolo, and Jan Schneemeier, 2nd Annual Holden Conference at Indiana University
Delegated Blocks
By Amil Dasgupta and Richmond Mathews, WFA 2023
Socially Optimal Eligibility Criteria for ESG Funds
By Roman Inderst and Marcus Opp, FIRS 2023
Blockholder and CEO Wealth-performance Sensitivity
By Huang Sheng, Paris December Finance Meeting 2022
Distressed Firm Restructurings and Hedge Funds with Expertise: Saviors or Vultures?
By Nina Baranchuk and Michael Rebello, EFA 2022
Global Zombies
By Edward Altman, Rui Dai, and Wei Wang, CICF 2022
Does Proxy Advice Allow Funds to Cast Informed Votes?
By John G. Matsusaka and Chong Shu, FIRS 2022
Implications of the Term Structure of Interest Rates fcor the Duration of the Corporate Investment
By Antoine Hubert de Fraisse, FIRS PhD Session 2022
Foundation-controlled Firms and CEO Compensation
By Van Diem Nguyen and Reda M Moursli, WFC 2021
Effectiveness of monitoring, managerial entrenchment, and corporate cash holdings
By Panagiotis Couzo, Shantanu Banerjee, and Grzegorz Pawlina, FMA 2020
Raising Capital under Demand Uncertainty
By Spyros Terovitis, KWC Conference in Entrepreneurial Finance 2019
Refereeing:
Journal of Economic Dynamics and Control, Review of Corporate Finance Studies, Review of Financial Studies (*2)