Research

Working Papers:

• "Community Bank Deposit Strategy and Financial Reporting"

  • Abstract: While community banks are vital to local economies, they often operate with limited external oversight, providing significant discretion in financial disclosure. I use the sudden increase in interest rates in 2022 as an exogenous shock to community banks’ funding strategies. I find that community banks that heavily adjust their deposit rates, which I label as non-relationship-based banks, increase their risk profile during periods of high rates to manage their net interest margins. However, this increase in risk is accompanied by a concurrent decrease in loan loss provisions, consistent with these banks actively managing their regulatory capital ratios and reported risk levels. In examining the potential for robust reporting systems to mitigate the increased risk and underprovisioning, I find that no difference in high-quality reporting systems, indicating that bank managers consciously manage capital ratios to mitigate the effects of increased risk. Finally, I extend these findings to local communities and document that counties with greater exposure to non-relationship-based banks experience lower new-business growth, higher mortgage denials, and lower home values.

  • Dissertation

• "Lender Financial Reporting and Debt Contracting"

  • Abstract: Using the issuance and adoption of the current expected credit loss (CECL) standard as an exogenous shock to lenders’ financial reporting, I study the relation between lenders’ financial reporting and debt contracting. I investigate this relation through measuring three aspects of contracting: complexity, restrictive language, and covenant structure. I find that lenders significantly reduce the number of covenants included in their debt contracts following the issuance of CECL, but do not change covenants following the adoption of CECL. Additionally, I find that lenders do not change the complexity or restrictive language after both CECL issuance and adoption. I also find that small borrowers see the greatest reduction in covenant use following CECL. I ensure my findings are not explained by a change in lenders’ screening efforts nor the mechanical result of contract renegotiation. These results imply that CECL reduced lenders’ incentives to monitor due to the early recognition of losses and increased transparency around loan losses.

Research in Progress:

• Effect of Private Equity Acquisition on Financial Reporting Accuracy: Evidence from the Health Care Industry

• Bank Participation in Dividend Recaps

• Non-fundamental Trading around Earnings Announcements