Research

Job Market Paper:

Human Capital and IPO Timing, November 2022

I show that labor mobility affects the timing of a firm's decision to go public. Employees of private firms compensated with stock options face high separation costs. They have to exercise or forfeit their option grants shortly after termination, which can force them to stay with the firm until its IPO. As a result, the firm has incentives to delay its IPO to retain the workers. Using state-level changes in the enforceability of non-compete agreements, I show that a decrease in labor mobility pushes firms to go public earlier. The results are stronger for firms with higher levels of stock option compensation and firms whose options are costlier to exercise. Overall, my findings emphasize the importance of frictions in labor contracting in firms' financing decisions.

Working Papers:

Real Effects of ESG Investing, October 2022

I study whether ESG mutual funds affect environmental policies at their portfolio companies. I use a change in the methodology of the MSCI ESG Leaders Index as a source of quasi-exogenous variation in levels of ESG holdings at firms. I show that firms excluded from the index are more likely to open new plants and increase their toxic releases. I present evidence that the result is driven by lower monitoring efforts by institutional investors. When a fund family's ESG funds divest from a firm, the fund family has lower incentives to influence environmental policies at the firm. The paper highlights that the composition of a firm's ownership has real effects on its environmental policies.

Fund Family Matters: How Index Funds Improve Corporate Governance, July 2021

Presentations: Midwest Finance Association 2021, Eastern Finance Association 2021, Australian Banking and Finance Conference 2021

I propose a novel mechanism that explains why index funds may have a beneficial effect on corporate governance. Mutual fund families centralize voting decisions and may have incentives to monitor even when their individual index funds do not. The presence of index funds strengthens the voice mechanism of corporate governance. Increased index fund holdings facilitate the coordination between funds from the same fund family and lead to fewer votes cast in support of the management by funds in the same family. My results demonstrate that as long as families offer index funds with active funds, the increasing size of index funds does not lead to less monitoring of the management.

Threat of Hedge Fund Activism and Risky Investment, June 2021

Presentations: 2nd International Corporate Governance Conference

I study the effect of a threat of hedge fund activism on corporate investment. I find that managers are less likely to undertake acquisitions when subject to a higher threat of activism. They decrease the number of risky, value-creating acquisitions undertaken by the firm. I present evidence that the results can be explained by the manager's exposure to firm-level risk. Hedge fund activists often pursue a restructuring of the target firms, which may increase the riskiness of the firm's assets and reduce the manager's incentives to take on new risky projects. Overall, my results demonstrate that activists can create ex-ante inefficiencies by altering the incentives-risk sharing tradeoff of the manager's compensation contract.