Working papers:
Determinants and Consequences of Return to Office Policies. With Andra Ghent and Vasudha Nair.
We study firms' return-to-office (RTO) policies by hand-collecting and classifying announcements for the Russell 3000. Most firms allow some remote work but few allow fully remote work. Relatively lower office rents in a city are associated with more in-person work. However, firm and manager characteristics are more consistent predictors of RTO policies than urban economic characteristics. Specifically, larger firms and firms led by older or male CEOs are more likely to mandate in-person work. Thus, RTO policies may reflect managerial or organizational preferences more than economic tradeoffs. Finally, we find no significant stock market reaction to policy announcements.
Media coverage: The Economist, Scientific American, NPR
Risk, Reward, and Ratings: How Firms Use Tax Avoidance to Sustain Inflated Credit Ratings. With Todd Kravet, Trent Krupa, and Sam Piotrowski.
Inflated credit ratings temporarily reduce the cost of debt and mitigate the impact of the tax avoidance risk premium. Consistent with this, we show that rating inflation is positively related to future tax avoidance, particularly for firms with less intense debtholder monitoring. The relation is stronger when managers have greater career concerns, which suggests firms respond differently when the cost of debt is lower due to upwardly-biased ratings compared to when the cost of debt is lower due to high but accurate ratings. Our results indicate that rating inflation temporarily fools some investors and allows firms to engage in short-term risk-shifting through tax avoidance.
Does Mortgage Rate Lock-in Dampen Commercial Real Estate Busts? With Robert Kurtzman and Alexei Tchistyi.
We show that mortgage lock-in effects play a significant role in the commercial real estate market. Using data on securitized commercial mortgages, we find a nearly 20% reduction in the probability of sale for the average property when market interest rates are 100bp above the fixed rate on the mortgage. The increase in sales price for locked in properties is approximately 4%. These effects are not driven by financially distressed properties, differences in liquidity across markets, or differences in owner types. Our estimates suggest that the lock-in effect likely mitigated price declines by around 8% in the recent bust.
Credit Rating Inflation and Corporate Innovation. With Bharad Kannan.
Does credit rating quality affect corporate innovation? Using exogenous variation in rating quality that arises from competition among rating agencies, we show that firms with inflated ratings issue more patents, but their patent quality, as measured by scientific and economic value, declines. We provide evidence that suggests that managers engage in value-reducing patenting activity to exploit a compensation structure that rewards them for the number, but not the quality, of new patents. Our results are stronger in non-technology industries, which suggests that managers strategically exploit innovation when firms do not rely on patenting for value creation.
Financial constraints and latent financial distress. With Harry Turtle.
We examine the ability of the Federal Reserve's Senior Loan Officer Opinion Survey (SLOOS) to capture financial constraints in comparison with existing measures of financial constraints. This measure predicts future aggregate defaults and charge-offs for commercial and industrial loans. Next, we confirm that this measure effectively predicts aggregate defaults and financial distress in our Compustat sample with large predictive lead times. In a panel design, we compare our approach with the Whited and Wu (WW, 2006) firm-level financial constraints measure, and find the aggregate SLOOS measure provides comparable adjusted R-squareds. Together, the WW and SLOOS measures provide independent and interaction impacts that effectively predict constraints and distress. As expected, capital expenditures are inversely related to SLOOS, but are unexpectedly positively related to WW's measure.
Works in progress:
Loan Extensions in CMBS. With Jiakai Chen and Alexei Tchistyi.
Publications:
Social Connections and Bank Deposit Funding. With Jing Wang. Journal of Banking and Finance, 2025, 178.
The Imitation Game: How Encouraging Renegotiation Makes Good Borrowers Bad. With Andra Ghent and Alexei Tchistyi. Review of Financial Studies, 2024, 37, 3648–3709 .
Semifinalist for Best Paper in Financial Institutions Award at 2022 FMA Conference.
Does Main Street Benefit from What Happens on Wall Street? With Andra Ghent. Journal of Financial and Quantitative Analysis, 2024, 59, 1300 -1336
The Impact of Credit Rating Information on Disclosure Quality. With Yung-Ling Chi. Financial Management, 2022, 51, 73-115.
Informational Efficiency in Securitization After Dodd-Frank. With Andra Ghent and Alexei Tchistyi. Review of Financial Studies, 2020, 33, 5131–5172.
Competition and Credit Ratings After the Fall. With Andra C Ghent. Management Science, 2018, 64, 1672-1692.
Media coverage: Wall Street Journal