Published and Accepted Papers

The Job Rating Game: Revolving Doors and Analyst Incentives
Journal of Financial Economics, accepted for publication
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

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 View, 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)
FRA Best Paper Prize 2018
Abstract:
Partisan bias affects the decisions of financial analysts. Using a novel hand-collected dataset that links credit rating analysts to party affiliations from voter records, we show that analysts who are not affiliated with the President's party are more likely to downgrade firms. Our identification approach compares analysts with different party affiliations covering the same firm at the same point in time, ensuring that differences in the fundamentals of rated firms cannot explain the results. The effect is more pronounced in periods of high partisan conflict and for analysts who vote frequently. Our results suggest that partisan bias and political polarization create distortions in the cost of capital of U.S. firms.

On the program of FRA 2018
Coverage: Bloomberg, CNBCCrain's Chicago Business

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 impose a substantial implicit "tax" on these firms. We establish this fact using data on lawsuits against U.S. corporations between 1996 and 2011 and the private economic value of a firm's newly granted patents as a measure of valuable innovation. Our results challenge the widely-held view that it is the greater failure propensity of innovative firms that drives litigation risk. Instead, our findings suggest that valuable innovation output makes a firm an attractive litigation target. More broadly, our results provide new evidence to support the view that the current class action litigation system may have adverse effects on the competitiveness of the U.S. economy.

On the program of AFA 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)
Revise and resubmit, Management Science
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