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Publications
1) A Flash in the Pan(demic)? Migration Risks and Municipal Bonds (with Matthew T. Gustafson, Daniel Weagley, and Zihan Ye) - Management Science, Accepted
Abstract: We show that migration induced by the COVID-19 pandemic significantly predicts changes in municipal bond yields. Negative migration shocks have made debt more expensive, especially in the areas and bonds most exposed to the work-from-home (WFH) transition. Over the full sample, a one standard deviation increase in COVID-period out-migration predicts an approximate 4.5 basis point rise in municipal bond yields, after controlling for a range of local economic factors including state- or CBSA-year fixed effects. This effect is 40% larger for areas in the top decile of WFH exposure and approximately twice as large for transportation-backed bonds. Morover, areas containing the most exposed bonds (i.e. those with out-migration and high WFH exposure) also experience relatively large post-COVID declines in municipal revenue. Overall, our results suggest that investors have changed their estimates of the level or uncertainty of municipalities' future cash flows, especially for areas and bonds most exposed to the transition toward remote work.
2) Competition, Product Differentiation, and Crises: Evidence from 18 Million Securitized Loans (with Kandarp Srinivasan and Anjan Thakor) - Journal of Financial Economics, 2024
Presented at: Northeastern University*, OCC Symposium on Systematic Risk and Stress Testing in Banking, CEAR-CenFIS Conference onf Financial Innovation*, Fixed Income and Financial Institution Conference*, 2023 Eastern Finance Association*
Abstract: RMBS sponsors contributed to the rise of new product features in securitized mortgages prior to the 2008 financial crisis. Using a regulatory shock to sponsor competition, we show securitization influences the design of mortgage contracts, empirically demonstrating a unique, feedback loop of product differentiation from the derived security (MBS) to the underlying asset (loans). Product differentiation in Prime MBS collateral rises faster than that of non-prime in the early boom period (2000-2004), a strategic choice by MBS sponsors in the face of increasing competition. At very high levels of competition, product differentiation targets non-prime (marginal) borrowers. We develop a theoretical framework for sponsor-induced product differentiation that explains these empirical findings.
3) Long-Run Labor Costs of Housing Booms and Busts (with Taylor Begley and Daniel Weagley) - Journal of Financial & Quantitative Analysis, 2023
Presented at: 5th Biennial Real Estate Conference, Finance Down Under, RCFS/RAPS Winter Conference*, EFA Annual Meeting , IFN Labor and Finance Group Meeting, University of Colorado*, Vanderbilt University
Abstract: We show large flows of workers in the the real estate agent occupation (REA) during the early 2000s from virtually all parts of the skill, wage, and education spectrums. We find those entering REA in MSAs with house price bubbles end up in occupations paying significantly less in the long-run as compared to similar REA entrants in non-bubble areas. Even in 2017, when house price and employment return to their pre-crisis levels, REA entrants in Bubble MSAs are in occupations earning about 6% less. These results point to lasting effects of labor allocation decisions in response to distorted price signals.
4) From L.A. to Boise: How Migration Has Changed During the COVID-19 Pandemic (with Daniel Weagley) - Journal of Financial & Quantitative Analysis, 2023
Media coverage: Associated Press (including PBS NewsHour, ABC News, Chicago Tribune, Star Tribune, + others), Wall Street Journal (Article 1, Article 2), Axios, Marketplace, New York Times (Article 1, Article 2), Bloomberg, News Channel 5 Nashville, WKRN Nashville, The Dallas Morning News, Kinder Institute of Urban Research, Fox Business, Palm Beach Post, Smart Cities Dive, Daily Montanan, ABC News
Abstract: We examine how broad changes in work arrangements and lifestyles brought on by the COVID-19 pandemic have affected households' location decisions. Using data on over 360,000 residential, interstate moves over the last five years, we find more than 12% of moves were directly influenced by the pandemic. Among pandemic-influenced movers, over 15% of households cite that remote work influenced their move. Lifestyle-related (job-related) migration increased (decreased) significantly, particularly for the subset of households who are likely to have access to remote work. We further find these changes in migration patterns are positively related to post-pandemic economic growth.
5) The Demise of the NYSE and NASDAQ: Market Quality in the Age of Market Fragmentation (with Matthew C. Ringgenberg) - Journal of Financial & Quantitative Analysis, 2023
Abstract: U.S. equity exchanges have experienced a dramatic increase in competition from new entrants, resulting in the fragmentation of trading across venues. While market quality has generally improved over this period, we show most of the improvements have accrued to the largest stocks. We then show this bifurcation in market quality is related to the fragmentation of trading. Theoretically, more exchange competition should reduce trading costs, yet it may also increase adverse selection for liquidity providers, leading to higher spreads. We document evidence of both effects -- fragmentation improves market quality for large stocks while small stocks experience relatively worse quality.
6) Short Trading and Short Investing (with Jesse Blocher and Chi Zhang) - Journal of Empirical Finance, 2020 (Internet Appendix)
Abstract: Short selling is measured in the literature as both constraint (e.g., lending fees) and activity (e.g., trades). We show that these two measures capture separate effects, which we characterize into two different strategies. The first strategy, "short trading," has minimal constraints, weekly scale return predictability and average risk. The second strategy, "short investing," has high constraints, a multi-month horizon and higher risk. Moreover, each strategy incorporates different types of information. Short trading includes short-lived information while short investing includes more long-lived, fundamental information. This diversity in short sellers has implications for both theoretical and empirical research.
Working Papers
1) Human Capital Disclosure and Workforce Turnover (with Aiyesha Dey, Berk Sensoy, and Joshua T. White)
Presented at: Hawai'i Accounting Research Conference, Vanderbilt University, Financial Markets and Corporate Governance Conference, 2022 FMA Annual Meeting, 2023 Bretton Woods Accounting and Finance Ski Conference, 2023 FARS Mid-Year Meeting*
Media Coverage: Harvard Law School Forum on Corporate Governance
Abstract: Human capital is a primary source of value in modern firms, yet little is known about what employee information firms disclose and whether it is timely and informative given the SEC's flexible disclosure rules. We examine the determinants of firms' human capital disclosures by combining textual analysis of disclosures via natural language processing with a proprietary dataset on 45 million individual career histories. We show that human capital disclosure is greater when market demand for disclosure is likely to be higher. Contrary to proprietary costs theories of disclosure, firms in competitive environments disclose more. Human capital disclosures also respond to changes in the underlying stock and flow of employees. Two SEC rule changes that encourage but do not require specific human capital information elicit greater disclosures, especially from firms that previously under-disclosed workforce information.
2) Directing the Labor Market: The Impact of Shared Board Members on Employee Flows (with Taylor Begley and Daniel Weagley)
Presented at: Drexel Corporate Governance Conference (short paper format), Vanderbilt University, University of North Texas, Georgia Tech, Erasmus Corporate Governance Conference*, Dolomites Summer Finance Conference, 2023 Fall Labor and Finance Conference, 2023 Conference on Empirical Legal Studies, Santiago Finance Workshop 2023, Michigan State*, University of Kansas, University of Tennessee*, Midwest Finance*, Bretton Woods Accounting and Finance Conference*, Northeastern Finance Conference , CSFN Conference on Governance and Sustainability, European Finance Association, Endless Summer Conference on Financial Intermediation and Corporate Finance, Northern Finance Association Annual Meeting, Owners as Strategists*, European Winter Finance Summit, SFS Cavalacde (scheduled)
Media Coverage: Columbia Law School Blue Sky Blog, ProMarket
Abstract: Using resume data on over 20 million U.S. workers, we find that the flow of employees between a pair of firms sharply drops by around 20% when the firms start to share a director on their boards. We find no trend prior to initiation, and the reduced flows persist throughout the overlapping period. This relationship is stronger in settings where firms are more likely to benefit from lower competition for each other's employees: betwee firms with a similar workforce, located in the same geographical area, and of similar size, between firms in the same product market, and between firms with greater historical flows of employees between the two companies. The drop in flows is most pronounced for high-skilled employees, who are likely more costly to replace. The results suggest that shared directors facilitate cooperative behavior in the labor market.
3) Untapped Equity as Dry Powder for Acquisitions
Presented at: Conference on Empirical Legal Studies (2016), FMA Annual Meeting and Doctoral Consortium (2015), Midwest Finance Association (2016), Northern Finance Association (2016), Midwest Finance Job Market Paper Symposium (2016), the Federal Reserve Board, George Washington University, Southern Methodist University, Temple University, Texas A&M University, Texas Christian University, University of Kentucky, University of Oklahoma, Vanderbilt University
Abstract: Capital market frictions likely impact firms’ investments, yet empirical identification is difficult as they often arise from endogenous firm choices. In this paper, I exploit a legally-imposed friction to estimate the effects of equity financing flexibility on investments. Using a novel identification strategy, I find that firms with greater equity financing flexibility are more likely to make an acquisition, generate higher announcement returns, and decrease the likelihood of being targeted. However, when firms exhibit poor monitoring this flexibility is associated with lower announcement returns, demonstrating the costs of greater flexibility. Overall, the results highlight the role and trade-offs of equity financing flexibility.
4) Uniqueness of the U.S. Dollar (with Hong Liu, Ngoc-Khanh Tran)
Presented at: Washington University in St. Louis*, Singapore Management University*
Abstract: It is widely documented that the U.S. dollar appreciates against other currencies when the U.S. economy experiences large bad shocks ("in crisis"), while the currencies of other countries depreciate against the U.S. dollar when similar shocks hit these countries. In addition, bad economic news in "normal" times makes the U.S. dollar depreciate but after similarly bad or worse news in crisis times, the U.S. dollar appreciates. We propose a simple safe-haven based equilibrium model that can help explain these puzzles. Our empirical analysis supports new predictions of our model.
* - denotes co-author presented
Works in Progress/Early Stage Research
1) Bank Lending and Firm-Level Human Capital (with Ivan Ivanov and Joshua T. White)
2) Educational attainment and long-run occupational outcomes (with Miguel Palacios)
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