New in Groningen: Nassima Selmane
|Date:||05 April 2019|
Nassima Selmane works on corporate finance, Behavioral Finance, and corporate governance. She moved to Groningen in the summer of 2017. After staying previously in Amsterdam, she took the chance to return to the Netherlands when a position was offered in Groningen.
Q. Why did you choose Groningen?
A. In 2014, I was a visiting researcher at the Free University Amsterdam and the Tinbergen Institute. I enjoyed the time spent in Amsterdam, and got to know the Dutch culture. I had very good memories of Amsterdam and the Netherlands. When I saw that the University of Groningen was offering a position in Finance, I applied. The first contact with the researchers in Groningen was very good, I felt that Groningen could be a good fit in terms of the research conducted by the Finance group among the Economics, Econometrics and FinanceDepartment, as well as the stimulating work environment offered by the University. In addition, I found that the city of Groningen is small but charming, so I decided to move to Groningen in August 2017.
Q. Could you tell us more about your your career so far?
A. After a Master’s degree in Corporate Finance from the University of Toulouse, I started a PhD in Finance at the Toulouse School of Economics and Toulouse School of Management, under the supervision of Prof. Alexander Guembel. Right after the completion of my PhD, I joined the Faculty of Economics and Business at the University of Groningen.
Q. Your research is in corporate/behavioral finance. What issues are dealt with in your research?
A. My primary research interest is on executive compensation. My PhD dissertation entitled "CEO Stock Option Exercises: Private Information and Earnings Announcements" examines CEO stock option exercise behavior.
I am interested in the question of whether CEO stock option compensation leads to manipulation. First, I investigate whether CEOs use their private information to time stock option exercises and to decide on the use of the obtained shares (sell/hold). Second, I examine whether stock option compensation makes CEOs manipulate information disclosures. I investigate earnings announcements when CEOs have very sensitive incentives given by options that are about to expire. Finally, the results of my PhD research provide evidence of information timing of option exercises, and suggest that CEOs manipulate the timing and contents of mandatory earnings announcements.
Recently, I started new projects with colleagues from the EEF Department. For example, with Niels Hermes, we examine the impact of board composition on the size and structure of executives compensation. With Swarnodeep Homroy and two colleagues from Lancaster University, we investigate whether decision making of financial agents (like financial analysts) can be affected by exogenous weather related factors. This project is multidisciplinary, it relies on diverse fields like behavioral finance and psychology, and aims to show how cognitive bias of professional agents can impact upon firm value.
Q. And how about societal relevance?
A. Stock option compensation has become well known over the last decades not only because it is increasingly used, but also because of the scandals related to practices around stock option awards and exercises. Both the public and the media focus on the idea whether the executives are being paid according to their performance or skills. Companies use stock option compensation to give CEOs incentives to increase the firm value and thereby mitigate the agency problems between owners and managers.
However, this type of compensation also provides executives with manipulation incentives. CEOs can use their private information to time their stock option exercises; or manipulate corporate news disclosures. My research challenges the general idea that stock option compensation mitigates agency problems. It highlights different opportunistic behaviors that pose the problem of control, and the difficult balance between the incentive-based compensation and the protection of shareholder interests.
Q. What can we expect of you in the future?
A. My future research plan is to continue working on corporate governance and behavioral finance issues. I hope to contribute to the research on corporate governance in general, and executive compensation policy in particular. I presented my research at several international conferences including the annual meeting of the European Economic Association, the Financial Management Association, as well as during invited seminars at VU Amsterdam, Tinbergen Institute, and Rotterdam School of Economics. Two of my papers are under revision before (re) submissions to top journals in Finance.
In order to develop further my international network, I am in the process of arranging a visit to a foreign University next spring.
For more information about Selmane's work, see here.