David J. Denis, Professor of Finance, University of Pittsburgh: Persistent Operating Losses and Corporate Financial Policies

Time:2017-03-08 Print

Topic: Persistent Operating Losses and Corporate Financial Policies

Speaker: David J. Denis, Professor of Finance, Joseph M. Katz Graduate School of Business, University of Pittsburgh

Date: March 8th (Wednesday)

Time: 10:00-11:30am

Location: Building 4, Room 102

Language: English


Among U.S. firms, operating losses have become substantially more prevalent, persistent, and greater in magnitude since 1970. Loss firms now comprise over 30% of the Compustat universe and such losses continue for a median of four years. We find that firms with negative operating cash flows account for more than half of the rise in average cash balances over the sample period, with average cash holdings increasing by 615% for negative cash flow firms vs. 95% for positive cash flow firms. Further, firms exhibiting operating losses now comprise the majority of equity issuers. These issuers stockpile most of the funds raised in the issue and use these funds to cover subsequent operating losses. We conclude that the immediate and expected ongoing liquidity needs of firms with persistent operating losses have substantially altered corporate financial policies.

About the speaker:

Professor Denis is the Roger S. Ahlbrandt, Sr. Chair and Professor of Finance at the University of Pittsburgh’s Katz Graduate School of Business. Professor Denis earned a B.S. degree in finance and managerial statistics from Syracuse University in 1982, an MBA from the University of Michigan in 1984, and a Ph.D. in finance from the University of Michigan in 1988. Prior to joining the Katz faculty in 2011, Professor Denis was a faculty member at Virginia Polytechnic Institute and State University from 1989 to 1995 and at Purdue University’s Krannert School of Management from 1995 to 2011.

Professor Denis’ primary teaching and research interests are in the area of corporate finance. He is the author of over 45 published articles in leading peer-reviewed journals on topics related to corporate governance, corporate financial policies, corporate organizational structure, corporate valuation, and entrepreneurial finance. He has also co-edited a book on corporate restructuring. He is currently an Editor of the Review of Financial Studies, has served as a Co-Editor of the Journal of Corporate Finance and is currently an Associate Editor of the Journal of Financial Research, the Financial Review, and Annals of Finance. He served as an Associate Editor of the Journal of Finance from 2001 to 2003, an associate editor of the Journal of Applied Finance from 2002-2008, and an associate editor of the Review of Financial Studies from 2010-2013.

Professor Denis has served as a member of the Board of Directors of Futuragene Corporation (2002-2003) and has served as a consultant to law firms, corporations, and government agencies on various aspects of financial markets and securities including bankruptcy reorganization, payout policy, credit ratings, corporate restructuring, stock prices, corporate valuation, corporate governance, capital acquisition, executive compensation, mortgage backed securities (MBSs), and collateralized mortgage obligations (CMOs).


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