Embedded Files
Published Papers
Published Papers
Investing With Purpose: Evidence From Private Foundations
with Kyle E. Zimmerschied
Accepted at The Journal of Finance
Abstract: We study the asset allocation and investment performance of U.S. private foundations that support the charitable sector. Large foundations generated positive risk-adjusted returns before 2008, driven by early access to private equity and venture capital funds, but have underperformed since. The median foundation underperforms by more than 100 basis points. Foundations with concentrated stock holdings achieve higher returns but assume more risk. Due to the constraints imposed by the 5% minimum spending rule and accommodating monetary policy, foundations increase risk-taking and reach for yield. Over time, a conservative asset allocation decreases real wealth, reducing charitable giving.
A New Lease on Firm Behavior
with Robert Connolly, Fotis Grigoris, and Crocker Liu
Journal of Corporate Finance, 2025, 94(1)
See the ASC842 Leasing Data here
Runner Up Award, 2021 Financial Markets and Corporate Governance Conference
Abstract: When firms have discretion in valuing their balance sheet debt, how do they make this valuation decision given its impact on firm value? Firms make extensive use of operating leases, but unlike other types of debt, their balance sheet value is set by the firm. Using novel information on operating leases, we examine firm behavior in valuing these leases. We find that 20% of firms report higher-than-expected rates, reflecting their cost of unsecured rather than collateralized borrowing. These firms have poor information quality, operate in competitive markets, and understate lease and debt ratios by 15%.
Paying Managers of Complex Portfolios: Evidence on Compensation and Performance from Endowments
with Robert S. Harris
Journal of Financial and Quantitative Analysis, 2024, 1-35.
Abstract: We examine compensation for endowment Chief Investment Officers (CIOs) overseeing portfolios with significant allocations to alternatives. We find widespread use of bonuses and that large endowments with high alternative allocations hire CIOs with stronger backgrounds, pay them more, and have higher pay-for-performance sensitivity. We find weak evidence of a relationship between compensation and future performance. Our results align with contract theory predictions but differ from empirical findings on pension funds. Endowments pay CIOs more, rely more on bonuses, attract more experienced professionals, and have lower turnover than pensions. This suggests more effective talent management compared to politically influenced public pensions.
How Does Human Capital Affect Investing? Evidence from University Endowments
with Gregory W. Brown, Robert S. Harris, and Christian T. Lundblad
Review of Finance, 2023, 27(1), 143-188.
2023 IQAM Prize in Financial Economics, Review of Finance
2019 WFA Two Sigma Award for Best Paper on Investment Management
Abstract: We examine the links between human capital and endowment investing. Harnessing detailed information on university endowments, we find that higher asset allocations to alternative assets accompany higher levels of human capital in the endowment’s investment process. Moreover, high levels of human capital are linked to larger returns, even on a risk-adjusted basis. The improved investment outcomes arise because endowments (i) capture higher returns that can accompany alternative assets, (ii) select or have access to high performing managers, and (iii) minimize fees by accessing funds directly rather than through funds of funds. Our measures of human capital include expertise in alternatives on governing bodies, the presence of a chief investment officer, and the size of the investment staff. Finally, we conduct a novel survey of endowments and confirm that human capital is central in facilitating alternative investments.
Working Papers
Working Papers
Benchmarking Private Equity Portfolios: Evidence from Pension Funds
with Nik Augustin and Elyas Fermand
R&R at Management Science
Presentations: 15th Annual Private Equity Research Symposium (PERC); UNC Inaugural Alumni Conference; 2024 VSB Mid-Atlantic Research Conference in Finance (MARC); 2024 Eastern Finance Association (EFA); 2024 Silicon Prairie Finance Conference; 2024 Midwest Finance Association (MFA)
Media Mentions: Institutional Investors, CFA Institute
Abstract: We document significant heterogeneity in benchmarks used for US public pension fund private equity (PE) portfolios. Benchmark type (e.g., public vs. private, domestic vs. global), spread, and complexity vary predictably with PE allocations and specialty consultant use. General consultant turnover predicts PE benchmark changes, and leads to broader operational shifts; after a general consultant change, there is a 7% higher probability of PE consultant turnover. Public pension funds beat their PE benchmarks about half the time, but over the last 20 years, benchmarks consistently became easier to beat. We attribute benchmark changes to consultants' labor market incentives to expand their client portfolio, rather than changing private equity return expectations.
The Real Effects of Operational Risk: Evidence from Data Breaches
Presentations: EFA (2020, cancelled); SWFA (2020, cancelled); NFA (2019)
Abstract: Operational risk poses unique challenges to corporations around the world. However, little is known about the consequences of risk management vulnerabilities on financing costs and firm outcomes. In this paper, I document substantial and persistent effects on financing costs and debt contracting caused by operational risk management vulnerabilities following data breaches of public firms. Exploiting data breach events between 2005 and 2015, I find that lenders charge breached firms 15 to 20 percent larger spreads, and tighten covenant intensity, consistent with a shift in control rights over cash flows. The effect is larger for breaches of financial information or malicious cyber-attacks, and for firms with lower attention to risk management. Moreover, financial and operating leverage increases, profitability drops, and firms face a higher probability of default. Lastly, ex-ante mispricing by banks does not explain these findings.
Work in Progress
Work in Progress
Running Digital Asset Funds
Debt Financing in Higher Education
Book Chapters
Book Chapters
The Palgrave Encyclopedia of Private Equity. In: Cumming, D., Hammer, B. (eds) Palgrave Macmillan
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