Assistant Professor of Finance

Kelley School of Business, Indiana University

You can find my cv here and reach me at

Finance Theory Group Member

Google Scholar profile  SSRN webpage

Research Papers

Credit Ratings and Market Information (with Joel Shapiro)   Review of Financial Studies, 2022, 35(10), 4425–4473 (Lead Article and Editor's Choice) 

Link to SSRN, Link to RFS

Accurate credit ratings are important for both investors and regulators. We demonstrate that the market for credit risk provides an important source of discipline for credit rating agencies (CRAs). We examine a model in which a CRA's rating is followed by a market for credit risk that provides a public signal - the price. More-informative trading increases the CRA's incentives to be accurate by making rating errors more transparent. We show that this source of discipline is (a) robust to moral hazard, multiple CRAs, and connected primary and secondary markets and (b) specific to the market for credit risk.

Externalities of Responsible Investments (with Michele Bisceglia and Jan Schneemeier)

Revise and resubmit, Journal of Finance

We develop a model to study the efficiency of socially responsible investing (SRI) as a market-based mechanism to control firms' externalities. When responsible and profit-motivated investors interact, the former tend to concentrate on a subset of firms in the economy, while excluding others. This concentration of responsible capital can mitigate free-riding and coordination issues in the adoption of green technologies, but it can also create product market power and crowd out the green investments of excluded firms. If the crowding-out dominates, firms' aggregate green investments and welfare are higher without SRI. In equilibrium, responsible capital concentrates the most when concentration is the least desirable.

Resilience in Collective Bargaining (with Carlos F. Avenancio-León and Roberto Pinto)

Revise and resubmit, Journal of Financial Economics

Washington Center for Equitable Growth Working Paper Series

Issue Brief in: Washington Center for Equitable Growth, UC San Diego Today, Inside INdiana Business

A central finding of the theoretical literature on bargaining is that parties’ attitudes towards delay influence bargaining outcomes. However, the ability to endure delays, resilience, is often private information and hard to measure in most real-world contexts. In the context of collective bargaining, we show firms actively attempt to become financially resilient in anticipation of labor negotiations. Firms adjust their financial resilience to respond to the passage of right-to-work laws (RWLs), unionization, and labor negotiation events. Unions' financial structure also responds to RWLs. Our findings suggest resilience is key to understanding the process through which collective bargaining determines wages.

Ownership and Competition (with Jan Schneemeier

Yihong Xia Best Paper Prize at the China International Conference in Finance 2021

Press: Kelley School of Business News

We develop a framework to explore how financial markets shape the ownership structure of industry rivals. A fraction of identical investors acquires diversified portfolios with positions in all firms (common owners), while the remaining investors hold undiversified portfolios. When investors influence competition, the return of diversified portfolios and the risk of undiversified portfolios may increase with the industry's degree of common ownership (CO). This crowding out of undiversified investors exacerbates the anti-competitive effects of CO and generates non-fundamental volatility. Our results are robust to alternative mechanisms to influence competition and different trading motives, and offer novel empirical implications.

Managers and investors face a coordination problem when choosing the importance of earnings in their strategies. I study how the coordination risk (the risk that they don't place the same weight on this metric) influences a firm's allocation of resources to long-term investments. When investors' valuations are particularly sensitive to their earnings expectations, I show that there is a tension between the investment allocations that maximize firm value and those that minimize the costs of miscoordination. This tension between efficiency and fragility shapes the design of managerial incentives and drives coordination failures that result in inefficient corporate short-termism.

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.