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Economists for Trump Bhagat

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Sanjai Bhagat - Wikipedia

Sanjai Bhagat is the Professor of Finance at the Leeds School of Business at the University of Colorado Boulder. He serves as an independent director on corporate boards, and advises various government agencies on corporate finance and corporate governance.[1]

Career

Bhagat graduated with a degree in Mechanical Engineering at the Indian Institute of Technology -Delhi, before attending the University of Rochester for an MBA then earning a PhD in Finance at the University of Washington.

He began his career as an Assistant Professor of Finance at the David Eccles School of Business at the University of Utah; he then joined the University of Washington's Foster School of Business faculty as a visiting Assistant Professor of Economics and Finance. After teaching at the University of Chicago (Chicago Booth) as a visiting Associate Professor of Finance, he joined the Leeds School of Business at University of Colorado. He has also worked at the Economics department at Princeton University as a Visiting Professor, and the U.S. Securities and Exchange Commission.[2]

At the Leeds School of Business, he was the founding Director of the Burridge Center for Securities Analysis & Valuation.[3]

Research work

Bhagat's research focuses on corporate governance, value-creating acquisitions, IPO valuation, new venture finance, executive compensation, ESG, capitalism and rule of law. His paper, "Corporate Governance and Corporate Performance" was awarded the Paper of the Decade Award for being the most impactful paper in the Journal of Corporate Finance during 2008–2018.[4] Bhagat has written extensively on executive pay and board of directors compensation and equity.[5][6]

His paper "The Promise and Perils of Corporate Governance Indices",[7] was selected as one of the "Best Corporate and Securities Articles" by the Vanderbilt Law School publication Corporate Practice Commentator.[8] The European Corporate Governance Institute also awarded the article the De Brauw Blackstone Westbroek Law Prize for best paper.[9][10] He is the author of Financial Crisis, Corporate Governance, and Bank Capital, which argues that future financial crises can be averted by changing incentive contracts for top executives and by requiring banks to hold larger cash reserves.[11]

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harv

Investing in sustainable funds that prioritize ESG goals is supposed to help improve the environmental and social sustainability of business practices. Unfortunately, close analysis suggests that it’s not only not making much difference to...more

As of December 2021, assets under management at global exchange-traded “sustainable” funds that publicy set environmental, social, and governance (ESG) investment objectives amounted to more than $2.7 trillion; 81% were in European based funds, and 13% in U.S. based funds. In the fourth quarter of 2021 alone, $143 billion in new capital flowed into these ESG funds.

How have investors fared? Not that well, it seems.

To begin with, ESG funds certainly perform poorly in financial terms. In a recent Journal of Finance paper, University of Chicago researchers analyzed the Morningstar sustainability ratings of more than 20,000 mutual funds representing over $8 trillion of investor savings. Although the highest rated funds in terms of sustainability certainly attracted more capital than the lowest rated funds, none of the high sustainability funds outperformed any of the lowest rated funds.

That result might be expected, and it is possible that investors would be happy to sacrifice financial returns in exchange for better ESG performance. Unfortunately ESG funds don’t seem to deliver better ESG performance either.

Researchers at Columbia University and London School of Economics compared the ESG record of U.S. companies in 147 ESG fund portfolios and that of U.S. companies in 2,428 non-ESG portfolios. They found that the companies in the ESG portfolios had worse compliance record for both labor and environmental rules. They also found that companies added to ESG portfolios did not subsequently improve compliance with labor or environmental regulations.

This is not an isolated finding. A recent European Corporate Governance Institute paper compared the ESG scores of companies invested in by 684 U.S. institutional investors that signed the United Nation’s Principles of Responsible Investment (PRI) and 6,481 institutional investors that did not sign the PRI during 2013–2017. They did not detect any improvement in the ESG scores of companies held by PRI signatory funds subsequent to their signing . Furthermore, the financial returns were lower and the risk higher for the PRI signatories.

Why are ESG funds doing so badly? Part of the explanation may simply be that an express focus on ESG is redundant: in competitive labor markets and product markets, corporate managers trying to maximize long-term shareholder value should of their own accord pay attention to employee, customer, community, and environmental interests. On this basis, setting ESG targets may actually distort decision making.

There’s also some evidence that companies publicly embrace ESG as a cover for poor business performance. A recent paper by Ryan Flugum of the University of Northern Iowa and Matthew Souther of the University of South Carolina reported that when managers underperformed the earnings expectations (set by analysts following their company), they often publicly talked about their focus on ESG. But when they exceeded earnings expectations, they made few, if any, public statements related to ESG. Hence, sustainable fund managers who direct their investments to companies publicly embracing ESG principles may be over-investing in financially underperforming companies.

The conclusion to be drawn from this evidence seems pretty clear: funds investing in companies that publicly embrace ESG sacrifice financial returns without gaining much, if anything, in terms of actually furthering ESG interests.

IFrame Content

Read more on Investment management or related topic Sustainable business practices

Sanjai Bhagatis Provost Professor of Finance at the University of Colorado, and author of Financial Crisis, Corporate Governance, and Bank Capital, published by Cambridge University Press.

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[### Dr. Sanjai Bhagat, Ph.D.

The Federalist Society

https://fedsoc.org › bio › sanjai-bhagat](https://fedsoc.org/bio/sanjai-bhagat)

Sep 12, 2024 — Sanjai Bhagat, PhD, is professor of finance at University of Colorado. Previously, he has taught finance at Princeton University, ...

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Economists For Trump

New Letter In Support of President Trump's Re-election effort (ANNOUNCED october 30, 2020):

*Economists In Support of President Trump's Re-Election Effort

We enthusiastically endorse President Trump's re-election efforts on the basis of his track record and continued economic policy agenda.

Prior to 2020, the President's pro-growth economic policy agenda included regulatory reform and tax reform that among other changes reduced the federal corporate tax rate to 21%. We believe this meaningfully contributed to accelerate GDP growth and historically low unemployment which fell the the lowest level in half a century. Wage growth also picked up during this period for the first time in decades and 2019 saw the largest single-year percentage gain in median household income on record (a 6.8% increase) to $68,700. These economic gains have been widely shared across-the-board for Americans.

While the COVID-19 pandemic, which originated from overseas, resulted in an economic contraction during the first half of 2020, we believe that the significant 2020 third quarter GDP growth figure reflects the President's commendable efforts at promoting a robust recovery.

We believe that Vice President Joe Biden's proposals to add regulations and raise taxes amid an economic contraction, namely raise the federal corporate tax rate to 28% from 21%, will meaningfully hinder the economic recovery and slow the process of Americans getting back to work.

We believe that President Trump presents the best choice in the 2020 Presidential election for a strong economic recovery and shared prosperity over the next four years.

Signatories:

A Letter By Over 100 EConomists In Support of President Trump's Economic Policy Agenda (ANNOUNCED ON MAY 11, 2018):

Economists In Support of President Trump's Economic Policy Agenda

We enthusiastically endorse President Trump's economic agenda to create jobs and restore economic growth.

We believe the President's Tax Cuts and Jobs Act (TCJA), which lowered the corporate income marginal tax rate from 35% (previously the highest rate among OECD countries) to 21% and provides individual income tax relief for tens of millions of middle-class Americans, will bolster economic growth, wage growth and job growth both in the short-term and long-run.

We commend the President's record setting reduction in the number of new federal statutes and his administration's efforts to adopt a regulatory budget. We believe this will have a significantly positive impact on economic growth by providing relief to businesses that previously were hampered by unnecessary regulations set forth by previous administrations.

We believe that reciprocal free trade with lower trade barriers on all sides produces higher overall economic growth and hope that the President's efforts to negotiate better trade deals, includingwillingnessto re-enter the Trans Pacific Partnership (TPP), will bring about a stronger long-run free trade equilibrium by reducing trade barriers and opening markets that were previously closed to American businesses.

We hope that Chinese President Xi's statedwillingness to reduce China's 25% auto tariffwill be honored and is an early sign that President Trump's negotiations to promote trade are working.

The combination of a more competitive tax environment, fewer burdensome regulations, and negotiations to lower overall trade barriers has already played a role in improving consumer sentiment, business sentiment and the economic growth trajectory of the economy since the beginning of 2017.

The Congressional Budget Office (CBO) nowestimatesthat U.S. real GDP will grow above 3.0% in 2018 which we believe is another bellwether of an improved outlook on economic growth, in part resulting from the President's pro-growth economic policy agenda.

We reject the notion that the economic stagnation realized since the 2007-2009 recession is the best our economy can generate. Reversing the poor economic policies of the previous administration will once again unleash the economic potential of the most productive, innovative economy in the world.

We believe that the President's economic policy efforts are a strong step in the right direction to restore long-run economic growth and opportunity for all Americans.

Signatories (100):

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