Published Papers
The Effect of Investor Attention on Fraud Discovery and Value Loss in Securities Class Action Litigation (with S. Ferris, N. Jayaraman, and P. Kothari)
We examine the effect of investor attention on value loss due to securities class action lawsuits and litigation‐based fraud discovery. We find that investor attention is positively associated with damage to corporate reputation and the magnitude of the value losses suffered by defendant firms. The reputational damage to defendant firms with higher investor attention is evident from poor operational performance and lower institutional ownership after filing. Investor attention is positively associated with the diffusion of information regarding fraud and it accelerates lawsuit filing. The effects of investor attention, however, are not subsumed by the severity of the fraud. Our results are robust to a battery of tests that addresses selection and endogeneity concerns.
Journal of Financial Research 44 (2021): 513-552.
Featured in the Columbia Law School Blog on Corporations and Capital Markets
Awarded "Best corporate paper" at 2019 India Finance Conference
Presented at: 2019 Indian Finance Conference*, 2018 American Law and Economics Annual Meeting*, 2016 Financial Management Association Annual Meeting, 2016 Southwest Finance Association Annual Meeting*, University of Missouri (* indicates presentations by co-authors)
Working Papers
The Use of Political Connections in the Defense of Corporate Litigation (with S. Ferris)
This study examines how defendant firms use their political connections as part of their litigation defense. We discover that firms anticipating lawsuits make preventive political contributions, while sued firms contribute during litigation. Cases of politically connected defendant firms are more quickly resolved, and are more likely to get dismissed or moved to another jurisdiction. Political connections, however, do not affect judicial verdicts or penalty awards. After Citizens United, defendant firms make larger contributions during lawsuits but fail to receive greater benefits. This suggests that the rate of return on political investments might be lower than hypothesized.
Revise and Resubmit at Journal of Financial Research
Presented at: Federal Reserve Bank of Richmond, University of New Mexico, Loyola Marymount University, University of Denver, University of Wisconsin Milwaukee, Florida International University, 2017 Financial Management Association Annual Meeting, University of Missouri
The Corporate Effects of Conflicting Political Views: CEO vs the Firm (with S. Ferris)
This study examines how differences in political views between a firm and its CEO affect corporate investment, performance, and value. We argue that this divergence in political views as measured by relative political contributions also captures differences in values and vision for the firm's future. We find that this political divergence affects corporate investment policies while negatively influencing firm performance and value. We further discover that political divergence affects managerial hiring decisions, the design of executive compensation, and corporate political activity.
Revise and Resubmit at Financial Review
Presented at: 2020 Boca Corporate Governance Conference, California Polytechnic University, 2019 Southern Finance Association Annual Meeting
The Wicked Problem of the Global COVID-19 Vaccine Rollout: A Double Loop Model of Sensemaking? (with A. Rebeka, E. Frytz)
Complex and uncertain environments make it difficult for companies to make sense of who they are and what role they play in society. Companies have to act and communicate about their actions as they attempt to navigate conflicting expectations of multiple stakeholders, while balancing their corporate priorities and responsibilities. We have studied decisions and communicative actions of the four pharmaceutical firms that developed and commercialized COVID-19 vaccines – in the period between January 2020 and May 2021. We used a data-grounded theory building approach to develop a double-loop model of sensemaking. The model extends existing theories of sensemaking by separating the processes of firms figuring out who they are and what they should be responsible for in the pandemic and processes of firms responding to concerns of external stakeholders, particularly investors, governments, COVAX, and non-profit organizations. We provide interesting insights on how characteristics of external stakeholders, such as power and issue salience, interact with organizational factors, such as strategy and identity, to create different patterns of organizational responses. In addition, we further develop our understanding of how firms engage in polyphony when communicating with external stakeholders. We demonstrate that although firms faced the same context of the pandemic, there was a different degree of polyphony in their communication, which we believe is tightly related to processes of sensemaking. Building on a constitutive approach to communication, we further show that there may be a link between levels of polyphony in communication and organizational responsiveness to external stakeholders’ concerns.
Presented at: 2022 Southwest Academy of Management