Research

Research Interests

My current research agenda revolves around corporate governance regulations, composition of board of directors, executive compensation and financial reporting. In particular, I am interested in the relationship between directors personal characteristics, pay disparities within top management teams and corporate outcomes. 

The Role of Accounting Quality during Mutual Fund Fire Sales (2023), European Accounting Review (In Press)

with Facundo Mercado and Silvina Rubio

We study the ex ante role of accounting quality in mitigating the undervaluation generated by mutual fund fire sales. Asymmetric information between distressed mutual funds and the potential buyers of the securities being fire sold leads to an adverse selection problem resulting in an equilibrium in which buyers trade only at prices below the intrinsic value. Sellers accept these lower prices only because they have severe liquidity needs. To the extent that accounting quality helps market participants better estimate the intrinsic value of the securities being fire sold, we expect the adverse selection problem to be less severe for firms with better accounting quality. Consistently, we find that high accounting quality is associated with smaller fire-sale discounts. This result is explained by two complementary mechanisms. Analysts are more likely to provide price-correcting recommendations, and arbitrageurs trade more heavily on high-accounting-quality firms during mutual fund fire sales. Overall, our results show that accounting quality mitigates stock undervaluation caused by nonfundamental factors.

The Effect of Pay Disparities within Top Management on Conservative Reporting (2022), Accounting and Business Research,  53:4, 478-504.

with Mahmoud Gad and Trang Nguyen

We study the effect of the pay gap between the chief executive officer (CEO) and the next layer of executives in the top management team (TMT)—a proxy for promotion-based tournament incentives—on conditional conservatism in financial reporting. We find that higher levels of tournament incentives are associated with less conservative financial reports. Our results hold in an instrumental variable (IV) analysis and regressions using alternative measures of both pay gap and accounting conservatism. Furthermore, we find that senior executives’ engagement in tournaments for promotion is affected by their perceived probability of success. Specifically, the negative relationship between the pay gap and conservatism is stronger (weaker) when the CEO is more (less) likely to be replaced. Overall, our results indicate that pay disparities within the TMT play an important role in financial reporting. 

Financial reporting quality effects of imposing (gender) quotas on boards of directors (2021), Journal of Accounting and Public Policy, 41(2).

with Juan Manuel García Lara and Jose Penalva Zuasti

We analyze whether the passage of a Norwegian law requiring a minimum of a 40 percent of women on the boards of public firms affected financial reporting quality. Our results are consistent with a decrease in financial reporting quality for the firms that were most affected by the passage of the law, and with the effects being relatively short-lived. We also find evidence that board members characteristics, beyond gender, changed due to this law. These changes can partially explain our findings. Overall, our results show that mandating large changes to board composition over a relatively small period of time negatively affects financial reporting.

The monitoring role of female directors over accounting quality (2017), Journal of Corporate Finance, vol 45., pp. 651-668 

with Juan Manuel García Lara, Beatriz García Osma and Araceli Mora

We examine whether gender-driven inequalities in accessing corporate board positions have an impact on the monitoring role of boards of directors. We focus on the association between the presence of women directors, discrimination, and financial statements quality. Using a large sample of UK listed firms we find that a larger percentage of women among independent directors is significantly associated with lower earnings management practices. We further show that this relation disappears if we focus on firms that do not discriminate against women in the access to directorships. We interpret our evidence (1) as consistent with gender discrimination in the access to directorships leading to a positive association between women independent directors and accounting quality, and (2) validating prior evidence showing that men and women do not differ substantially when performing the same role, especially in highly specialized positions.