Research Interests:  private equity, venture capital, entrepreneurial finance, and corporate finance

Publications:

1. "Fees," 2023. (with David T. Robinson)
Palgrave Encyclopedia of Private Equity 

Under Revision: 

1.  "Private Equity, Consumers, and Competition" (with Ashvin Gandhi and Prabhava Upadrashta)
(R&R at Management Science)

• Abstract: This paper studies how product market competition shapes the impact of private equity (PE) acquisitions on consumers. We examine nursing home buyouts and observe that PE-owned facilities exhibit greater competitive sensitivity: competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak.  We find that PE-owned facilities are more sensitive to local market competition---even when comparing effects only across facilities purchased as part of the same acquisition---and are more responsive to a pro-competitive policy helping consumers compare facilities. This suggests that regulators should attend to the competitive sensitivity of acquirers and the concentration of markets where acquisitions occur, as well as consider pro-competitive policies to mitigate or even reverse PE's potentially adverse consequences.

• Presentations: UNC Private Equity Research Consortium, International Industrial Organization Conference, UCSD, Harvard/MIT/BU health economics seminar, U Chicago health economics seminar

• Featured in: Anderson Review, Bloomberg Law

Working papers: 

1.  "Investment, Debt, and Taxes" (with John Graham, Mark T. Leary, and Hyunseob Kim)

• Abstract: The extant evidence is mixed on whether companies respond to tax incentives when making capital structure decisions. We argue that it is important to examine capital structure choices in the context of external financing needs, such as when funding corporate investment. We examine 99 years of panel data for US public companies and find that firms use more debt to fund investment when corporate income tax rates are high, consistent with the tax hypothesis. We study, for the first time, the two largest tax hikes of the last century (one in the 1940s, one in the 1950s). Consistent with tax incentives, we find that firms increase leverage in response, and these effects are concentrated among firms with the highest needs for investment funding. A battery of tests shows that these results are unlikely to be driven by changes in economic conditions or investment opportunities associated with the coincident war efforts.

• Presentations: Virtual Corporate Finance Seminar, University of Maryland, University of Denver (scheduled), Boston University (scheduled) 

2. "How Private Is Private Equity? (with Niklas Huether)

• Abstract: Contrary to the name ``private'' equity, we show that more than half of buyout funds invest in publicly traded companies which remain publicly traded throughout their holding period.  We study two alternative explanations for why investors (are willing to) pay private equity fees for public investments. First, we hypothesize that these deals provide an efficient solution to the informational problem in fundraising. Using deal-level data, we show that private equity fund managers become activist investors in publicly traded companies to signal quality through observable performance before raising a new fund. We find no support for the alternative hypothesis that agency conflicts between fund managers and investors motivate these deals. Our analysis provides new evidence that private equity's  lack of mark-to-market valuations and low volatility do not necessarily come as a bug, but can remain a proclaimed feature, without the loss of informativeness to raise new funds.

• Presentations: FMA 2024, Chicago Entrepreneurship Workshop 2024, Boca Raton Corporate Finance Conference 2024

3. "Tying Fees to Investment Activity in Private Equity"

• Abstract: Private equity fund managers often receive a percentage of their investments as management fees but it remains unknown how this compensation scheme shapes their investment choices. I document evidence that the scheme leads managers to make incremental investments that, while increasing fees, hurt fund performance. Large funds tend to have the scheme and the effect is driven by managers that have a low chance of sharing profits and own a small share of funds. The evidence illuminates the misalignment of incentives in private equity fund management and underscores critical considerations for designing compensation structures within the industry. 

• Presentations: Oxford Private Equity Research Consortium, London Business School, California Corporate Finance Conference, FMA 

• Best Paper Award at FMA 2023: Semi-finalist 

4.  "Have Private Equity Owned Nursing Homes Fared Worse under Covid-19?" (with Ashvin Gandhi and Prabhava Upadrashta)

• Abstract: Over 40% of U.S. COVID-19 deaths occurred in nursing homes. Given increasing private equity (PE) ownership in healthcare and long-standing concerns that PE investors focus on profits to the detriment of patients, it is important to understand the impact of PE ownership during the COVID-19 pandemic. This study evaluates how PE acquisitions impacted the readiness and outcomes of nursing facilities during the onset of the COVID-19 pandemic. We relate PE ownership to COVID-19 cases, deaths, and personal protective equipment (PPE) shortages, controlling for facility characteristics, resident composition, local characteristics, and the severity of COVID-19 outbreak near the facility. PE ownership was associated with a mean decrease in the probability of confirmed resident cases by 7.1 percentage points ("pp") (p<0.01) and confirmed staff cases by 5.4 pp (p=0.01). PE was also associated with decreased probability of PPE shortages—including N95s (6.4 pp; p<0.01), surgical masks (7.6 pp; p<0.01), eyewear (4.8 pp; p<0.01), gowns (7.0 pp; p<0.01), gloves (3.3 pp; p=0.02), and hand sanitizer (2.3 pp; p=0.12). Facilities previously (but not presently) owned by PE firms did not fare similarly well. Prior PE ownership was associated with increased PPE shortages and, if anything, higher probability of resident outbreaks. Our results indicate that—contrary to a common media narrative—PE-owned facilities have actually fared better under the COVID-19 pandemic. They also suggest that the long-run consequences of PE ownership warrant further research. 

• Presentations: UNC Private Equity Research Consortium

• Featured in: Freakonomics Radio