Max Walker: Head of Class

Not only has Max Walker graduated as Head of Class and been accepted into UBC’s Law School, he has worked closely with Dr. David Koslowsky as a research assistant.

Their work has required data from a unique computer terminal, the Bloomberg Terminal, two of which operate in the Faculty of Management. The terminals provide company and industry financial data, quotes and analysis of securities, market news, stock exchange data.

Walker, however, is the expert on the subject and answered a few questions about his and Dr. Koslowsky’s work:

What is the goal and methodology of your research with David Koslowsky? How long is the research process?

Dr. Koslowsky and I are doing research on the optimal governance structure of firms. Particularly, we are looking into how board of director independence varies over the life cycle of the firm in order to establish a normative model for good practice in corporate governance. The term “independence” refers to the Board of Directors’ level of connections to Directors at other firms. The underlying model for the project is that younger firms will choose a lower level of board independence because they need the expertise of Directors with more connections and experience.

This research is important because the Board of Directors of the firm is responsible for directing all of the major decisions of the firm, such as hiring of senior management and investment strategy, yet scientific understanding of corporate governance is limited.

By using board of director data and board member biographic information, we are able to look at the connectedness of a firm's board members to other firms and compare it to firm performance statistics, such as returns. We are using this empirical work with historical data to verify this model of optimal governance structure.

The empirical tests and development of a mathematical model are being done this summer, and then Dr. Koslowsky and his co-author, Dr. Ian Stuart, will write a research paper containing the model and empirical results for submission to research journals. This initial research is expected to result in several more papers over the next couple of years as this research into the corporate governance life cycle is further developed.

How have the Bloomberg Terminals facilitated your research?

The majority of the empirical work was done using historical firm data such as the Boardex, CRSP, Compustat and Directors Database datasets with SAS as the statistics program.

The Bloomberg Terminal is used for the verification of firm information and the case analysis of peculiar or uncharacteristic firms. The terminal is particularly effective at quickly pulling up current in-depth data for individual firms. It can be a huge time saver!

What has it meant to you to be able to work with Dr. Koslowsky?

Working with Dr. Koslowsky has been an enlightening and enjoyable experience. I have had tremendous growth in my programming ability, knowledge of corporate finance and empirical analysis. My experience this summer has solidified my appreciation and fascination with finance research.

Facing challenging conceptual and analytical problems with a highly capable and experienced professor on a daily basis may seem daunting, but the challenge and novelty keeps the work very interesting. As a matter of fact, it is not uncommon for Dr. Koslowsky and I to wager a coffee over the result of our respective conflicting predictions.

There have been several days where I have been so interested in the results of my work that David has had to actively insist that I have to go home. Curiosity is a very strong motivator!

How will your research benefit the financial world?

Our research targets three segments of the financial world:

1. Firms: We will be providing a normative model to help firms make decisions about how to structure their board of directors to promote good practice in firm governance.

2. Policy makers and legislatures: The information we provide will help to provide some insight and guidance into the creation of effective corporate governance policy at the government regulatory level.

3. Economists and academia: Limited research has been done on board structure utilizing board of director network statistics. Our research will act as catalyst in corporate governance research.

When the research is concluded, what will you do next?

After completing my summer research term, I will be attending UBC Law in the hopes of pursuing my career in securities and mergers and acquisitions law. The knowledge and skills I have acquired will be incredibly useful in the future as I will be performing my fair share of legal research in corporate structure, and clients will most often include or be directly linked to boards of directors.