Published and Accepted Papers

  • Distracted Shareholders and Corporate Actions (with Alberto Manconi and Oliver Spalt)
    Review of Financial Studies, 2017, 30(5): 1660-1695
    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

Working Papers
  • The Job Rating Game: Revolving Doors and Analyst Incentives
    Winner of the AQR Top Finance Graduate Award 2016
    Winner of the WFA Cubist Systematic Strategies PhD Candidate Award for Outstanding Research 2016
    Winner of the Young Scholars in Finance Consortium Best Ph.D. Student Paper Award 2016
    Winner of the EFA Doctoral Tutorial Best Paper Prize 2015

    Revise and resubmit (second round), Journal of Financial Economics

    Investment banks frequently hire analysts from rating agencies. While many argue that this "revolving door" results in captured analysts, it can also create incentives to improve accuracy. To examine these issues, I construct an original dataset that links individual analysts to their career paths and to the securitized finance ratings they issue. I document that accurate analysts are more likely to be hired by underwriting investment banks. In addition, I exploit two distinct sources of variation in the likelihood of being hired by an underwriting bank. Both approaches imply that, as the likelihood to be hired by an underwriter rises, overall analyst accuracy improves. These findings suggest policymakers should consider incentive as well as capture concerns.
    Internet Appendix

    On the program of AFA 2017, WFA 2016, EFA 2016

  • Partisan Professionals: Evidence from Credit Rating Analysts (with Margarita Tsoutsoura)
    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 do not support 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 firm fundamentals cannot explain the results. The effect is more pronounced in periods of increased partisan conflict and during election quarters. Overall, our results suggest that partisan bias and political polarization may have adverse effects on the U.S. economy.

    On the program of FRA 2018

  • Litigating Innovation: Evidence from Securities Class Action Lawsuits (with Oliver Spalt)
    Low-quality securities class action lawsuits disproportionally target firms with valuable innovation. 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. We find that securities class actions impose a substantial implicit "tax" on highly innovative firms. Regarding the channel, our findings suggest that changes in investment opportunities and corporate disclosure induced by the innovation make successful innovators attractive targets of low-quality litigation. Overall, our results provide new evidence consistent with the view that the current class action litigation system has adverse effects on the competitiveness of the U.S. economy.

    On the program of AFA 2019
    Coverage: Columbia Law School's Blue Sky Blog
  • 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
    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 Las Vegas 2013