SASE New York – 2019 Socio-Economic Review – Best Paper Prize

The SER Best Paper Prize committee (Heather Haveman [chair], Isabelle Ferreras, Gary Herrigel) considered all the reviewed papers for the four 2018 issues, including symposia papers, but not state of the art, discussion or review forum papers. The committee looked for papers that: 1) addressed substantive questions and issues that have far reaching implications and are of interest to a broad range of SER readers; 2) clearly and effectively engaged prior theory and research; and 3) used state of the art research methods to analyze new or existing data sets in ways that either brought important new phenomena to light or substantially revised existing understanding of socio-economic facts, trends or relationships.

The committee is delighted to announce the winning paper for the 11th annual prize for the best submitted article published in the previous year: Jacob Apkarian’s “Opposition to Shareholder Value: Bond Rating Agencies and Conflicting Logics in Corporate Finance” (Socioeconomic Review 16(1):85–112).

The committee chair writes: This article addresses an important topic and provides an important correction to the myopia of research on corporate governance, which is almost always narrowly limited to investigating the shareholder value logic/orientation. Instead, Apkarian’s paper reveals why and when the goals of equity investors (shareholders) conflict with those of debt investors (bondholders); for example, the former push de-diversification while the latter promote diversification. This is important substantively because corporate financing is increasingly debtbased rather than equity-based. Moreover, the paper is an example of excellent integration of economic and sociological theory. Although debt-holders generally have less ability to influence management than equity holders do, large creditors, especially of short-term debt (e.g., asset-backed commercial paper), can coerce management by threatening to withhold funds. The likelihood of coercion may be greater among hedge funds than mutual funds and pension funds. But Apkarian argues that large bond-rating agencies like Moody’s and S&P are even more powerful, and so focuses on their reactions to corporate strategic decisions. The results of his statistical analysis are strong and will push scholars to extend his ideas.

Jacob Apkarian presented a paperas SASE NYC 2019, “Shifting Logics of Legitimacy and an Emerging Paradox in the Corporate Bond Rating Industry,” in Network N (Finance and Society) session N-02: Market Devices, Ratings and Intermediaries.