Douglas J. Fairhurst: Curriculum Vitae - Department of Finance

Douglas J. Fairhurst
Eller College of Management
McClelland Hall, Room 315R
The University of Arizona
Tucson, AZ 85721-0108
801.735.1230 (cell)
520.621.1261 (fax)
djfairhu@email.arizona.edu
http://www.djfairhurst.com
Education
Ph.D. Finance, The University of Arizona
2014 (Expected)
Dissertation Committee: Sandy Klasa (chair), Satheesh Aradhyula, Kathleen Kahle, Lubomir Litov,
Ryan Williams
M.B.A. Finance Emphasis, Brigham Young University 2009
B.S. Accounting, Utah Valley University 2005
Research Interests
Corporate Finance, Capital Structure, Liquidity Mangement, Mergers and Acquisitions
Research
Working Papers
"Financing Seasonal Demand and Capital Structure Choice" (Job Market Paper)
• Financial Management Association Annual Meeting and Doctoral Consortium, October 2013
(Scheduled)
• European Finance Association Annual Meeting, August 2013
• University of Arizona, February 2013
• Brigham Young University, October 2012
"What Determines the Composition of a Firm’s Total Cash Reserves," with L. Cardella and S. Klasa
• Texas Tech University, September 2013 (Presented by co-author)
• University of Arizona, September 2013
• University of Waterloo, November 2013 (Scheduled presentation by co-author)
"Property Theft and the Cost of Equity Capital," with D. Dhaliwal, J. Brushwood, and M. Serfling
• Southern Finance Association Annual Meeting, November 2013 (Scheduled)
Work in Progress
"Sources of Gains in Horizontal Mergers: A Text-Based Measure of Geographic Expansion"
Teaching
Courses taught at the University of Arizona
Finance 909 Master’s In Finance Thesis Report Class (Taught two times)
Finance 360 Quantitative Financial Management (Taught one times)
Teaching ratings for courses taught at the University of Arizona (Mean score for overall rating of teaching
effectiveness on a 5 point scale)
Finance 909 - 4.9, 5.0
Finance 360 - 4.7
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Awards, Fellowships, & Grants
Selected participant for FMA Doctoral Student Consortium 2013
Conference Travel Grant - American Finance Association Meetings, Chicago, IL 2012
University of Arizona GSPC Travel Grant Award 2012, 2013
U of A Graduate Assistant Fellowship
2009-present
Conference Participation
Presenter - Southern Finance Association Annual Meeting, Fajardo, Puerto Rico** Nov, 2013
Discussant - Southern Finance Association Annual Meeting, Fajardo, Puerto Rico** Nov, 2013
Presenter - Financial Management Annual Meeting, Chicaco, IL** Oct, 2013
Presenter - European Finance Association Annual Meeting, Cambridge, UK Aug, 2013
Discussant - Financial Management Association Annual Meeting, Atlanta, GA Oct, 2012
Attendee - American Finance Association Annual Meeting, Chicago, IL Jan, 2012
**Denotes scheduled conference participation
Service
University of Arizona PhD Student Seminar Organizer/Originator 2010-2013
Reviewer - Midwest Finance Association Annual Meeting 2013
Professional Experience
United Rentals, Inc., Senior Financial Analyst 2008
Utah State Tax Commission, Tax Auditor 2005-2007
Premier Administration, LLC, Trust Accountant 2004-2005
Professional Memberships
American Finance Association
Financial Management Association
References
European Finance Association
Southern Finance Association
Sandy Klasa, Ph.D.
Kathleen Kahle, Ph.D.
Anheuser-Busch Endowed Chair
Associate Professor
Associate Professor
Department of Finance
Department of Finance
University of Arizona
University of Arizona
1130 E. Helen Street
1130 E. Helen Street Tucson, AZ 85721-0108
Tucson, AZ 85721-0108 Phone: 520.621.7489
Phone: 520.621.8761
kkahle@email.arizona.edu
sklasa@email.arizona.edu
Lubomir Litov, Ph.D.
Ryan Williams Ph.D
Assistant Professor
Assistant Professor
Department of Finance
Department of Finance
University of Arizona
University of Arizona
1130 E. Helen Street 1130 E. Helen Street
Tucson, AZ 85721-0108 Tucson, AZ 85721-0108
Phone: 520.621.3794 Phone: 520.621.2852
litov@eller.arizona.edu
rwilliams@eller.arizona.edu
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Detailed Summary of Working Papers
"Financing Seasonal Demand and Capital Structure Choice" (Job Market Paper)
Firms that face seasonal demand account for an important fraction of the U.S. economy. However, there
is surprisingly little evidence on these firms’ financing and capital structure decisions. Yet, studying these
decisions provides a unique setting to shed light on theoretical motivations for capital structure choice.
Consistent with pecking order and financial flexibility models of capital structure choice, I show that
seasonal investment needs are financed with debt that has low exposure to information asymmetries, such
as short-term debt and trade credit. However, supporting flexibility but not pecking order predictions, I
find that cash holdings are not used to finance seasonal investment. I also document that seasonal firms,
which return to the capital markets frequently for seasonal short-term debt, hold less total debt and have
long-term debt with a longer average maturity, which is additional support for flexibility theory. Finally,
consistent with flexibility predictions, I show that seasonal firms adjust toward target leverage ratios at a
slower rate during quarters when seasonal investment needs are highest. Overall, I conclude that seasonal
firms’ financing and capital structure decisions can be explained by the financial flexibility model of capital
structure choice.
"What Determines the Composition of a Firm’s Total Cash Reserves," with Laura Cardella and Sandy
Klasa
We document that there is significant cross-sectional variation in the liquid assets that make up firms’ cash
reserves. This variation can best be explained in the context of firms optimally trading off the benefits of
investing in financial assets that earn a higher yield, with the larger transaction costs and additional risk
of these assets. We also find evidence that suggests in poorly governed firms, managers prefer to hold
most of their firm’s cash reserves in highly liquid financial assets that earn shareholders a lower yield
so they can more easily spend these reserves on self-serving projects. Overall, our findings imply that
firms’ choices with respect to the financial assets in which they invest their cash reserves is an important
component of corporate liquidity management practices.
"Property Theft and the Cost of Equity Capital," with Dan Dhaliwal, James Brushwood, and Matthew
Serfling
Although prior work suggests that a firm’s business risk has a substantial impact on its cost of equity
capital, there is little evidence identifying these sources of risk. A large and overlooked source of business
risk that costs firms and investors billions of dollars annually arises from firms’ exposure to property theft.
Based on arguments linking a firm’s exposure to property theft to non-diversifiable cash flow effects, we
hypothesize that a rise in a firm’s exposure to property theft will increase the firm’s cost of equity capital.
We test our hypothesis using changes in state-level property crime rates as a source of variation in a
firm’s exposure to property theft. Consistent with our hypothesis, we find that a rise in property crime
rates increases a firm’s cost of equity capital through increased systematic risk. Further, omitted variables
related to overall criminal activity, local economic conditions, and labor market characteristics do not drive
this finding. Finally, the impact of property theft on firms’ cost of equity capital is more pronounced when
individuals have greater incentives and opportunities to steal from firms. Overall, our paper shows that
business risk arising from exposure to property theft impacts firms’ financing costs.
Last updated: September 11, 2013
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