I am a PhD candidate at the University of Oxford. My research focuses on Corporate Finance and Financial Intermediation. You can find my cv here and contact me at firstname.lastname@example.org
In July 2019, I will join the Kelley Business School at Indiana University as an Assistant Professor of Finance.
Executive Compensation and Short-Termism (Job Market Paper)
The stock market is widely believed to pressure executives to deliver short-term earnings at the expense of long-term value. This paper develops a model of the interaction between executive compensation and stock market prices, and analyzes its implications for corporate short-termism. I show that inefficient short-termism can arise in equilibrium as a self-fulfilling prophecy, due to strategic complementarities between the firm's investment horizon and investors' decision to acquire information about short-term performance or long-term value. However, the severity of the underlying agency problem between the manager and shareholders fully determines whether short-termism is an equilibrium outcome. This implies both that the stock-market cannot be identified as the cause of corporate short-termism and that it actually has the potential to alleviate the problem. The model helps us assess evidence presented in the "myopia" debate and yields novel implications regarding ownership structure, executive compensation, and managerial horizon.
How does market information affect credit ratings? How do credit ratings affect market information? We analyze a model in which a credit rating agency's (CRA's) rating is followed by a market for credit risk that provides a public signal - the price. A more accurate rating decreases market informativeness, as it diminishes mispricing and, hence, incentives for investor information acquisition. On the other hand, more-informative trading increases CRA accuracy incentives by making rating inflation more transparent. We analyze implications for policy and the real economy.
Credit Ratings and Competition revise and resubmit at Management Science
I analyze a model of competition between credit rating agencies (CRAs). In equilibrium, investors buy only assets that received high ratings from multiple CRAs. This has two contrasting effects on the quality of certification. On the one hand, the issuer needs to pass the screening of multiple CRAs; other things being equal, this improves certification. On the other hand, it has the perverse effect of incentivizing dishonest ratings, by introducing a team dimension that dilutes the CRAs' reputational concerns. When the perverse effect dominates, competition reduces the quality of certification. However, mandating disclosure of indicative ratings can restore the first-best outcome.
Work in progress
Information Specialization in Financial Markets