Dr. Vishaal Baulkaran is an Associate Professor of Finance and Finance Area Chair at the Dhillon School of Business, University of Lethbridge. His main areas of research are corporate governance and corporate finance and he is currently working on projects related to financial literacy, real estate income trust governance and more.

In this 5 Questions article, Vishaal discusses business governance models, investing in green bonds, consumer debt and the like.

1. A lot of your work revolves around corporate governance. What is some of the best advice you’d give business owners in how they set up their governance?

Regardless if your business is private, public or not-for-profit, having a proper governance structure in place can be beneficial in terms of business reputation, financing costs and ability to attach funding. Having independent directors, diverse board members with varying skills and expertise have all shown to be beneficial to firms. Often small and medium sized private businesses ignore corporate governance altogether. Having good governance structure will, for example, likely result in less risk to lenders which can be beneficial to small private firms in terms of borrowing costs. So, having good governance is not only beneficial to large publicly traded firms.

2. Your research also deals with “dual class shares” in companies. Can you explain what that term means and some of your findings regarding dual class ownership structures in companies?

Dual class firms are companies with multiple classes of common shares. These shares typically have the same rights to dividends but they differ in the number of votes in the election of board members. For example, class A shares can have one vote per share while class B shares might have 10 votes per share. Naturally, this can lead to conflict between owners of class A and class B shares. My research generally shows that dual class structure leads to higher compensation to family members or controlling shareholders, discount in firm value compared to single class firms and entrenchment of executives and directors that are elected by controlling shareholders.

3. Businesses in Canada are encouraged to be as environmentally responsible as possible. Do you think stock markets and investors will react positively to such initiatives?

In one of my recent research papers, I investigate the impact of green bonds issuance on shareholder value.  Green bonds are debt financing with the sole purpose of funding environmentally sustainable projects such as clean transportation, waste management, sustainable electricity production, etc. I show that investors react positively to the issuance of green bonds by publicly traded corporations.

In fact, environmental, social and governance investment criteria (ESG) is quickly becoming a major choice variable in investment decisions by individual investors as well as large institutional investors. ESG ranking and ESG mutual funds have been around for a decade or more, but of course, climate change is one of the primary drivers of renewed focused on ESG investments.

Research on ESG investment criteria shows that firms that rank high on ESG criteria tend to have lower cost of capital. The evidence on whether better ranking ESG firms attach higher valuation is still inconclusive. However, even if firms with a high ESG ranking don’t perform better than firms with lower ranking, given the current climate change debate, investors are more likely to invest in firms with a strong focus on ESG rather than those who ignore it.

4. You were recently awarded funding by FP Canada Research Foundation to research Leveraging Equity in Residential Property to Provide Retirement Income. Can you explain what you’re hoping to discover and how this could help members of our community?

Given that retirement funding shortfall is becoming a major concern for working Canadians, policymakers and the government in general, it is important to investigate this problem from the point of view of all stakeholders (workers, retirees, finance professionals and policymakers) and to provide recommendations that will serve as guidelines for policy making and financial retirement decision making. For example, according to an OSC survey, 9 in 10 Ontarians over 45 years of age report that they are financially concerned about retirement and in another study 7 in 10 Canadians feel that they are financially incapable of funding retirement (BDO Canada, 2019).

My co-investigator (Dr. Pawan Jain) and I proposed to investigate how Canadians can leverage equity in residential property to provide retirement income as it is an important issue affecting a wide range of stakeholders. We hope to understand under what circumstance individuals are likely to use their residential property as retirement income, what the more tax efficient options available to individuals are and the role financial planners can play in advising and educating their clients about funding retirement income with residential property.

With our findings, we expect to be able to recommend the different types of options available to homeowners in leveraging residential properties to fill the retirement income gap that exists today. We plan on using a model akin to those used by financial planners to assess clients' risk tolerance when advising on the various options available when utilizing residential property to fund income.
Not only do we believe the findings of this research will enhance the delivery of financial planning services to Canadians, but they will also have a significant impact on society in general. With grim statistics pointing to a post-retirement income gap, the findings of this study have the power to influence retirees’ standard of living, potentially their health and overall well-being.

5. Based on your research on personal bankruptcy and consumer credit delinquency, what advice would you give Albertans/Canadians?

Basic financial literacy is important. Money management skills are as important as reading and maths skills. The findings in this project are that individuals with a personal finance course in high school are less likely to become delinquent in their auto loans, credit card debt, mortgages etc, as well as file for bankruptcy. This study is based on U.S data but I am sure similar results would hold for Canada.  I personally think every single Canadian would benefit greatly from a basic personal finance course in high school.


Vishaal has published papers on dividend policy, board of directors, executive compensation, firm ownership structure, real estate, climate financing and more. You can find further information on Vishaal here, and find a complete list of his publications here.