Working Papers

Please find here my current working papers:

Credit ratings and quarterly investment spikes

(First draft May 16 2024, last update February 18 2026) [presentation slides]

We examine how credit rating downgrades impact firms' investment efficiency. Using spikes in the firm's fourth fiscal quarter capital expenditures, typically linked to "use it or lose it" budgeting constraints, we show firms reduce their abnormal investments by -24.5% following downgrades, suggesting improvements in internal capital allocation. This decrease is especially pronounced for financially constrained firms and those facing budgeting complexity, e.g., firms with more operating segments and larger deviations in investments, sales, and number of employees. Moreover, stock market reaction is more muted around downgrade announcements when firms have larger investment spikes, suggesting downgrades efficiently discipline corporate investment decision-making.

The Dynamics of Credit Rating Report Content

(co-authored with Darren J. Kisgen, updated October 13 2025, Revise & Resubmit Journal of Empirical Finance)

We examine the variation in information contained in rating reports, distinct from the letter rating. Specifically, we examine the clarity, length, numerical content, uncertainty, and uniqueness of rating reports. We first document that rating content matters. Stock market reactions to rating changes are significantly affected by rating content, and rating content predicts future rating changes. We next show that analyst fixed effects explain about 20% of content variation. Finally, we find that the information quality contained in rating reports significantly improves with increased litigation risk following the Dodd-Frank Act, especially for ratings that diverge from expectations.

Non-Financial Disclosure and ESG Ratings: Evidence from Refinitiv’s ESG Scoring Adjustment

(co-authored with Jan Schnitzler, last version April 16 2026) [presentation slides]

We use Refinitiv's 2020 ESG scoring revision, which generated large cross-sectional varia-tion in ESG score changes across 6,149 firms overnight, to study how firms respond to changes in ESG scores. Because ESG scores exhibit limited within-firm variation over time, such changes are otherwise difficult to observe. We find that firms experiencing larger nega-tive score revisions subsequently improve their ESG scores. These improvements are driven primarily by expanded disclosure, including sustainability reporting, governance structures, and engagement with ESG surveys. We also show that these patterns do not reflect an ad-hoc response to the methodology revision. Instead, the relation between score changes and disclosure improvements follows trends already present prior to the adjustment, indicating a broader process of market-wide disclosure convergence.

Shareholder-connected Director Appointments: Evidence from Cross-ownership

(co-authored with Yang Cao, updated May 16 2024) [presentation slides]

We explore how cross-ownership affects non-executive director appointments. Using investor cross-ownership to proxy candidate connections to shareholders, we analyze 18,371 appointed directors against a pool of 329,521 potential counterfactual candidates. Our findings show a positive link between shareholder connections and director appointments. Firms with governance concerns tend to appoint connected directors, which shareholders perceive favorably, leading to improved stock returns and voting support. These appointments improve corporate governance and increase capital expenditures. Directors benefit from increased external job prospects and higher internal compensation.

Google Sites

Report abuse