Published and Accepted Papers

The Job Rating Game: Revolving Doors and Analyst Incentives
Journal of Financial Economics, 2020, 135(1): 41-67
AQR Top Finance Graduate Award 2016
WFA Cubist Systematic Strategies PhD Candidate Award for Outstanding Research 2016
Young Scholars in Finance Consortium Best Ph.D. Student Paper Award 2016
EFA Doctoral Tutorial Best Paper Prize 2015

Abstract:
Investment banks frequently hire analysts from rating agencies. While many argue that this "revolving door" creates captured analysts, it can also create incentives to improve accuracy. To study this issue, I construct an original dataset, linking analysts to their career paths and the securitized finance ratings they issue. First, I document that accurate analysts are more frequently hired by underwriting investment banks. Second, I exploit two distinct sources of variation in the likelihood of being hired by a bank. Both indicate that, as this likelihood rises, analyst accuracy improves. The findings suggest policymakers should consider incentive effects alongside capture concerns.
Internet Appendix

Coverage: ProMarket Blog, Chicago Booth Review, Harvard Law School Forum on Corporate Governance and Financial Regulation

Distracted Shareholders and Corporate Actions (with Alberto Manconi and Oliver Spalt)
Review of Financial Studies, 2017, 30(5): 1660-1695
Abstract:
Investor attention matters for corporate actions. Our new identification approach constructs firm-level shareholder "distraction" measures, by exploiting exogenous shocks to unrelated parts of institutional shareholders' portfolios. Firms with "distracted" shareholders are more likely to announce diversifying, value-destroying, acquisitions. They are also more likely to grant opportunistically-timed CEO stock options, more likely to cut dividends, and less likely to fire their CEO for bad performance. Firms with distracted shareholders have abnormally low stock returns. Combined, these patterns are consistent with a model in which the unrelated shock shifts investor attention, leading to a temporary loosening of monitoring constraints.
Internet Appendix  Data

Coverage: Bloomberg Opinion, Harvard Law School Forum on Corporate Governance and Financial Regulation, Chicago Booth Review

Working Papers

Partisan Professionals: Evidence from Credit Rating Analysts (with Margarita Tsoutsoura)
Revise and resubmit, Journal of Finance
Financial Research Association (FRA) Best Paper Award 2018
Abstract:
Partisan perception affects the actions of professionals in the financial sector. Using a novel dataset linking credit rating analysts to party affiliations from voter records, we show that analysts who are not affiliated with the U.S. president’s party downward-adjust corporate credit ratings more frequently. By comparing analysts with different party affiliations covering the same firm in the same quarter, we ensure that differences in firm fundamentals cannot explain the results. We also find a sharp divergence in the rating actions of Democratic and Republican analysts around the 2016 presidential election. Our results show analysts’ partisan perception affects firms’ cost of capital and investment policies.

On the program of FRA 2018, UNC/Duke Corporate Finance Conference 2019, NBER SI Corporate Finance 2019, AFA 2020
Coverage: BloombergBloomberg OpinionCNBC, VOX, Crain's Chicago Business, CBR Comic, Irish Times, Barron's

Litigating Innovation: Evidence from Securities Class Action Lawsuits (with Oliver Spalt)
Abstract:
Low-quality securities class action lawsuits disproportionally target firms with valuable innovation output and lead to substantial shareholder-value losses. We establish this fact using data on class action lawsuits between 1996 and 2011 and the value of newly granted patents as a measure of valuable innovation output. Our results challenge the widely-held view that greater failure propensity of innovative firms drives their litigation risk. Instead, our findings suggest that valuable innovation output makes a firm an attractive litigation target. Our results support the view that the class action litigation system may have adverse effects on the competitiveness of the U.S. economy.

On the program of AFA 2019, NBER SI Law & Economics 2019
Coverage: Columbia Law School's Blue Sky Blog, Chicago Booth Review

Learning by Doing: The Value of Experience and the Origins of Skill for Mutual Fund Managers (with Alberto Manconi and Oliver Spalt)
Abstract:
Learning by doing matters for professional investors. We develop a new methodology to show that mutual fund managers outperform in industries where they have obtained experience on the job. The key to our identification strategy is that we look "inside" funds and exploit heterogeneity in experience for the same manager at a given point in time across industries. As fund managers become more experienced, they pick better stocks, and their trades become better predictors for abnormal stock returns around subsequent earnings announcements. Our approach identifies experience as a first-order driver of observed mutual fund manager skill.

On the program of WFA 2015, EFA 2014, CEPR Gerzensee 2014, FIRS 2014, FRA 2013