Ryan J. Whitby
    Assistant Professor of Finance
    Rawls College of Business
    Texas Tech University
    Box 42101
    Lubbock, TX 79409

    Office:  W323
    Phone:  806.742.3338
    Email:  ryan.whitby@ttu.edu

Publications

1. Option Backdating and Board Interlocks with John Bizjak and Michael Lemmon, Review of Financial Studies, 2009, 22, 4821-4847.
We examine the role of board connections in explaining how the controversial practice of backdating employee stock options spread to a large number of firms across a wide range of industries. The increase in the likelihood that a firm begins to backdate stock options that can be explained by having a board member who is interlocked to a previously identified backdating firm is approximately one-third of the unconditional probability of backdating in our sample. Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy.
2. Evidence of Motives and Market Reactions to Sale and Leasebacks with Kyle Wells, Journal of Applied Finance, 2011, 2, 1-14.
A sale and leaseback is an alternative to traditional financing in which the owner of an asset contracts to sell the asset and then to lease it from the buyer.  This paper focuses on some of the motivations behind this decision.  We find evidence supporting the primary theoretical reason for leasing, namely taxes.  We also find evidence supporting liquidity needs and capital constraints as motivators.  Results are mixed for financial distress and there is little support for asymmetric information motivations.

Working Papers

1. Expertise, connections, and the labor market for corporate directors (2011) with George D. Cashman and Stuart L. Gillan
To better understand the role of individual directors on corporate boards, we examine how director attributes affect the likelihood of receiving additional board seats. We find evidence that general skills are valued in the director labor market, as individuals with an MBA, S&P 500 board experience, and more connections to other corporate boards are more likely to receive additional board seats. At the same time, replacement directors tend to have greater financial expertise and individuals with financial backgrounds are less likely to lose board seats. We also find evidence that who a director knows is more important than what they know in that connected directors, regardless of skill, are more likely to receive an additional appointment while highly skilled, unconnected directors are not. Additionally, we find that only director connections mitigate the negative consequences associated with serving on the board of firms that restate their financials. 
2. A Test of the Substitution Between Debt and Leases Using Sale-and-Leaseback Transactions (2011) with James Schallheim and Kyle Wells
A large sample of sale-and-leaseback (SLB) transactions is employed to test whether debt and leases are substitutes or complements because the SLB maintains the asset base unchanged. Overall, substitutes (60%) dominate complements (40%). For the substitute subsample, leasing is associated with increases in capital expenditures, financial constraints, and the use of operating leases. For the complement subgroup, we find a significant relation between leasing and the firm’s marginal tax rate. A significant positive stock market reaction to the announcement of the SLB indicates an overall gain, and this result is stronger for the complement subgroup than for the substitute subgroup.
3. Price Discovery in the Treasury-Bill When-Issued Market (2011) with Jeffrey M. Mercer, Mark E. Moore, and Drew B. Winters
When-issued (i.e., forward) trading in T-bills yet to be auctioned provides a unique environment for examining price discovery.  T-bills are auctioned in a sealed-bid process so participants in concurrent when-issued trading cannot observe a spot market price, yet the forward price ultimately must converge on the auction outcome price.  While the evidence in this study indicates that traders in the when-issued market “discover” the ultimate auction price, little evidence is found showing that standard order flow variables contribute to price discovery.  Instead, the ability to observe a few trades with relatively small volume in the when-issued market is sufficient to learn the ultimate auction price from the sealed-bid process.
4. REIT Momentum and Characteristic-Related REIT Returns (2011) with Paul R. Goebel, David M. Harrison, and Jeffrey M. Mercer
Prior research using factor models has shown that similar to traditional equities, momentum is a dominant driver of REIT returns.  This study analyzed REIT returns in a characteristic based setting and found stark differences between REIT returns and prior evidence that examines non-REIT equity returns.  These differences were primarily found when comparing characteristic sorted portfolios across differing interest rate environments and size portfolios.
5. Examining the Efficiency of Commodity Index Exposure (2010) with Gerald Jensen and Jeffrey M. Mercer
The benefits of holding commodities in a diversified portfolio are well known.  The most efficient method to add commodities to a portfolio, however, remains unclear.  In this paper we explore whether benefits beyond those found in prior studies can be attained by disaggregating the GSCI index and allowing the individual constituent contracts to contribute to the asset allocation in a time varying manner.  We also utilize an ex ante signal of changes in the interest rate and monetary policy environment to trigger tactical asset reallocations that could have been replicated historically in real time.  These alternative weighting methods have clear benefits – up to a 19% difference in cumulative wealth in a diversified portfolio over a 35 year period.

Works in Progress

1. Exploring Your Strategic Alternatives (with Josh Fairbanks, Yung-Yu Ma, and Michael Stegemoller)
2. Dynamic Asset Allocation and Persistence in Mutual Fund Performance (with Jason C. Hsu, Vitali Kalesnik, and Brett Myers)
3. Deal or No Deal: The Value of Connections in the Real Estate Market (with George Cashman, Stuart Gillan, and David Harrison)
4. Powerful Politicians, Political Connections, & Firm Performance (with Stuart Gillan and Brett Myers)
5. Industry Regulation & Its Effects on Capital Structure (with Brett Myers)
6. Price Efficiency in IPO Stocks (with Jack Cooney and Junyoup Lee)
7. Optimal Commodity Investments