ZENG (TIMOTHY) FAN

Naveen Jindal School of Management The University of Texas at Dallas

SM 31, 800 West Campbell Road

Richardson, TX 75080-3021

       Tel: 214-218-7214

       Email: zxf082000@utdallas.edu

AREAS OF INTEREST

Empirical corporate finance with a focus on corporate debt markets

 

EDUCATION

Ph.D. in Finance, The University of Texas at Dallas                                  Expected May 2013

M.Sc. in Operations Research, Case Western Reserve University             2008

B.S. in Applied Mathematics, Beijing Institute of Technology                  2004

 

WORKING PAPERS

“Executive Compensation and the Covenant Structure of Debt” (Job Market Paper)

·         Presented at 2010 Financial Management Association Conference, New York

·         Presented at 2011 Southwestern Finance Association Conference, Houston

·         Presented at 2011 Midwest Finance Association Conference, Chicago

·         Accepted at 2011 Southern Finance Association Conference, Key West

“The Effect of Bank Covenants and the Pricing of Corporate Public Debt”

·         Will be presented at 2012 Financial Management Association Conference, Atlanta

“The Effect of Bank Covenants on the IPO Underpricing” with Robert Kieschnick

 

WORKING IN PROGRESS

“Long Run Performance of Equity Premium Predication”

·         Presented at 2011 Financial Management Association Conference, Denver

 

TEACHING EXPERIENCE

2012  Spring   Business Finance   University of Texas at Dallas      Evaluation   4.9/5.0

2012  Fall        Business Finance   University of Texas at Dallas     Evaluation    N/A   

 

HONORS AND AWARDS

2011 American Finance Association Ph.D. student travel grant

 

PERFESSIONAL SERVICES

·         2010/2011/2012 FMA Presenter/Discussant

·         2011 SWFA/MFA Presenter/Discussant

 

MISCELLANEOUS

Computer Skill: SAS (Certified SAS advanced programmer), STATA

Language: Chinese Mandarin (native), English (fluent)

 

REFERENCES

Robert Kieschnick (Chair)

Associate Professor of Finance

Naveen Jindal School of Management

The University of Texas at Dallas

rkiesch@utdallas.edu

(972) 883-6273

 

Yexiao Xu

Associate Professor of Finance

Naveen Jindal School of Management

The University of Texas at Dallas

yexiaoxu@utdallas.edu

(972) 883-6703

 

Harold Zhang

Professor of Finance

Naveen Jindal School of Management

The University of Texas at Dallas

harold.zhang@utdallas.edu

(972) 883-4777

 

Han (Victor) Xia

Assistant Professor of Finance

Naveen Jindal School of Management

The University of Texas at Dallas

han.xia@utdallas.edu

(972) 883-6385

 

 

 

 

SELECTED PAPER ABSTRACT

Executive Compensation and the Covenant Structure of Debt (Job Market Paper)

    I examine how the debt covenant structure of a firm varies with managerial risk-taking incentives via sensitivities of CEO compensation to stock return volatility (Vega). I build a comprehensive firm debt covenant index by including both public debt and private debt issues. I find a robust negative relation between CEO compensation Vegas and firms’ debt covenant structures, even after considering alternative estimation procedures and endogeneity. I also find that the debt maturity of a firm is decreasing in Vega, and the cost of debt induced by Vega is reduced by the presence of covenants. Taken together, my results suggest that managers with high Vegas preserve their financing and investment flexibility by using few covenants, and that they use short-term debt and/or the higher cost of debt to reduce agency conflicts with creditors.

The Effect of Bank Covenants on the Pricing of Corporate Public Debt

    I investigate how the bank loan covenants imposed on a borrower impact its future public debt financing costs. I find that while public bond covenants reduce the at-issue yield spreads for public debt, the bank loan covenants increase the yield spread of public debt, even after controlling for all known yield spread determinant and considering endogeneity. In particular, bank covenants’ positive effect on the cost of public debt is amplified for both initial public debt offerings and when firms do not have Standard and Poor debt ratings. It is consistent with the hypothesis that unobserved firm riskiness information reflected in bank covenants is more valuable when the information asymmetry is greater. My evidence suggests that bank covenants convey very important information for public lenders concerning a firm’s ex ante and ex post riskiness that cannot be directly observed from a firm’s balance sheet.

 

The Effect of Bank Covenants on the IPO Underpricing” (with Robert Kieschnick)

    This paper examines the effect of pre-IPO bank loan covenants on a firm’s IPO underpricing. We test whether the information content in bank covenants could help reduce IPO underpricing. We find that, both the number of covenants and the tightness of covenants ameliorate IPO underpricing. Our results suggest that bank covenants contain important information that can be used to reduce the asymmetric information between firms and investors.