Research

My research examines the intersections of corporate finance, innovation, and organizational strategy to understand how financial mechanisms drive real-world economic outcomes. I explore how financial tools like venture capital and financial derivatives influence innovation in businesses, while also investigating the strategic behaviors of firms, such as leveraging a "second-mover" advantage to learn from competitors in R&D. 

Beyond firm-level strategies, my work assesses the impacts of regulatory shifts on entrepreneurial growth. I also study the value created by corporate takeovers, through governance or its effect on innovation and human capital. Ultimately, I aim to provide a comprehensive, data-driven picture of the forces that shape entrepreneurship and the global innovation ecosystem. 

Working Papers

Softening the Blow: The Role of Environmental Communication Following Product Recalls 

(with Andrea Schertler and Florian Stockler)

We examine how environmental communication via corporate social media affects the equity returns of firms around adverse product-market events. Product recalls expose firms to significant reputational damage and reductions in shareholder value. Prior literature demonstrates that investors value sustainability narratives, incorporating them into investment decisions and positively pricing environmental disclosures. Consequently, during crises, managers have strong incentives to shape investor perceptions by disseminating positive environmental narratives. Using a sample of product incidents and Twitter activity for international automotive firms, we employ an instrumental variable approach to isolate the impact of this communication. We find that firms engaging in environmental tweeting, immediately following a product recall, experience significantly less negative abnormal returns. This mitigating effect is specific to environmental content; general increases in social media volume yield no such benefit. The effect is substantially stronger when firms deploy specific, action-oriented environmental messages rather than generic sustainability claims. This strategic communication channel has become effective primarily in the post-2016 period, consistent with a shift in investor attention toward ESG commitments following the Paris Agreement. 

The Second Mover Advantage: R&D and Absorptive Capacity

 (with Michael Ferguson, and Jayoung Yoon)

Absorptive capacity (AC) is the extent to which a firm can translate R&D spillovers from its technological counterparts into its own productivity. We employ a new measure of AC based on Total Factor Productivity. Our measure of AC is positively related to real innovative outcomes: small firms with high AC produce higher quantity and quality of patents. Small firms with High AC earn positive risk-adjusted returns. These returns are positively related to long-horizon mis-pricing factors, limits to arbitrage, and limited investor attention. They are incremental to other linkages between firms and other, recognized R&D underpricing factors. 

Cross-border Patenting and Corporate Debt Capacity

We use global patent data and exploit the staggered adoption of the Patent Prosecution Highway, a patent examination cooperation program to evaluate the effect of globalization of patents on debt capacity of firms.  We show that patents filed globally are of higher quality, and loans to patenting firms increases. This increase is driven by a reduction in information asymmetry in global lending markets.  We also find that firms obtain international loans in low-tax countries which leads to a lower average tax burden.  This lower burden creates a higher debt capacity for patenting firms.   

Publications

1. Does Financial Innovation Lead to Technological Innovation? Evidence from Foreign Exchange Derivatives 

(with Lora Dimitrova)

Research Policy, Volume 55, Issue 7, September 2026, 105503, https://doi.org/10.1016/j.respol.2026.105503

Media mentions: The CFO

We investigate whether financial innovation, specifically the use of foreign exchange (FX) derivative products, spurs firms’ technological innovation, measured with patent-based metrics. Using a quasi-exogenous shock that reduces the cost of using FX derivatives and varying FX equity exposure of firms, we find that increased utilization of FX derivatives results in higher patent production. The primary mechanism driving this relationship is the reduction in financial constraints and enhanced risk management. The effect is especially pronounced for firms facing difficulties in raising equity capital. Our results indicate that the use of FX derivatives boosts innovative output by improving firms’ ability to raise equity capital, thereby increasing R&D investment, rather than by increasing risk-taking.

2. On the Causal Effect of Fame on Citations

 (with Jonathan Brogaard, Joseph Engelberg, and Edward Van Wesep)

Management Science, Volume 70, Issue 10, October 2024, Pages 6483-7383, https://doi.org/10.1287/mnsc.2022.00840  

Papers published in economics journals whose first authors are famous have more citations than papers whose second or third authors are famous. As a paper ages, its citation rate varies most with variation in the fame of the first author and less so with the fame of second and third authors. Author order is alphabetical so these patterns are unrelated to underlying quality. The magnitudes we find are large: a three-author paper written by the most prolific author in economics and his two research assistants would receive, on average, more than double the citations if the prolific author were first rather than second or third. The effect is especially pronounced in three, rather than two, author papers, suggesting that burying a famous author in the “et al” reduces citations even further. 

3. Capital Gains Tax, Venture Capital and Innovation in Start-ups    

(with Lora Dimitrova)

Review of Finance, Volume 27, Issue 4, July 2023, Pages 1471–1519, https://doi.org/10.1093/rof/rfac057 

Media mentions: Fraser Institute, and National Affairs

Shortlisted: 2024 Pagano-Zechner Award, The Review of Finance

We examine the effect of staggered changes in state-level capital gains tax rates on Venture Capital (VC)-backed start-ups and show that an increase in tax rates reduces patent quantity and quality. The results are consistent with a reduction in VC effort:  VC-level tax increases lead to incrementally lower patent production by start-ups located out-of-state, and not linked by a direct flight to the VC investor. We also find evidence of a change in entrepreneurs' incentives: after a tax increase entrepreneurs decrease innovation risk, and stay invested for longer (the lock-in effect).

4. Does the Mandatory Bid Rule Add Value to Target Shareholders?

Financial Management, Volume 48, Issue 3, Fall 2019, Pages 739-771, https://doi.org/10.1111/fima.12239 

WRDS Award for Best PhD Student Paper: NFA Conference 2012

I investigate whether implementation of the mandatory bid rule – the rule that grants all shareholders the right to participate in a takeover transaction at equal terms – affects target announcement returns. I use a difference-in-differences approach and the staggered adoption of the rule across 15 European countries. I find that the rule change leads to higher target returns. In full transactions, better accounting standards and share-holder protection norms of the acquirer leads to higher target returns. In majority transactions, greater value transfer from acquirers with weak accounting standards leads to higher target returns. I find weak evidence of overpayment by acquirers.

Work In Progress

Inventors in Mergers (with Irina Merkurieva)

Immoral Hazard? Hazardous Substances and Lack of Chemical Innovation (with Annalisa Tonetto and Alminas Zaldokas)

Permanent Working Papers

Does Hedging Reduce the Cost of Delegation?