Journal of Accounting Research. (2024)
Abstract: Complaints from institutional investors suggest that principles-based disclosure regimes that rely on financial materiality standards produce inadequate non-financial environmental and social (E&S) information. Using the staggered introduction of 40 country-level regulations that mandate disclosure, I document that reporting E&S information relates to increased investment from institutional owners and has material effects on firms’ investment and financing decisions. Firms mandated to disclose E&S information allocate more investment towards long-term, innovative projects and raise more equity capital. Evidence indicates that disclosure attracts long-term-oriented institutional clientele with E&S preferences, which then feeds back on firm decision-making. While the effects of non-financial disclosure are similar to those of improved financial disclosure, this clientele mechanism is unique. Taken together, these results suggest that jurisdictions that rely solely on financial materiality disclosure standards create non-financial information frictions with material effects on investors and firm decision-making.
Video Synopsis via Faculti
Media Mentions: Columbia Law School’s Blue Sky Blog
Presentations: FMA Annual Meeting 2021
Journal of Financial And Quantitative Analysis. (2023)
Abstract: I study VCs’ use of public market information and how attention to this information relates to private market investment outcomes. I link web traffic to public filings hosted on EDGAR to individual VCs. VCs analyze public information about industry peers before most deals. An increase in industry filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information—especially for low reputation VCs. Policymakers should consider spillover effects on private markets when setting public disclosure requirements.
Media Mentions: National Affairs
with Peter Iliev and Jonathan Kalodimos. Management Science (2021).
Abstract: We identify analysts’ information acquisition patterns by linking EDGAR server activity to analysts’ brokerage houses. Analysts rely on EDGAR in 26% of their estimate updates with an average of eight filings viewed. We document that analysts’ attention to public information is driven by the demand for information and the analysts’ incentives and career concerns. We find that information acquisition via EDGAR is associated with a significant reduction in analysts’ forecasting error relative to their peers. This relationship is likewise present when we focus on the intensity of analyst research. Attention to public information further enables analysts to provide forecasts for more time periods and more financial metrics. Informed recommendation updates are associated with substantial and persistent abnormal returns, even when the analyst accesses historical filings. Analysts’ use of EDGAR is associated with longer and more informative analysis within recommendation reports.
Media Mentions: Citywire
Policy Impact: SEC's Rule 15 under Regulation S-T
Abstract: The rise in passively managed corporate debt funds has resulted in increasingly inelastic demand for corporate debt. In this study, we quantify how passive debt ownership affects firms’ financial policy. Using fund-specific flows to capture firm-level changes in passive debt ownership that are exogenous to firm fundamentals, we find that firms respond to higher levels of passive debt ownership by increasing leverage. The borrower-friendly terms provided by passive debtholders could theoretically lead to several potential changes in investment or payout policy. We show that passive debt holding does not affect investment policy. Instead, passive ownership predicts increased payouts — exacerbating shareholder-debtholder conflicts. Passive debtholders enable these effects by reducing aggregate ex-ante and ex-post monitoring. The presence of a bank monitor moderates the relationship between passive debt ownership and increased payout, reinforcing the importance of this monitoring channel.
Presentations: FMA Annual Meeting 2020, SFA Annual Meeting 2020
with Franziska Schmid Gibbons and Vesa Pursiainen
Abstract: We investigate whether the disclosure of gender pay information leads consumers to change their purchasing decisions. Using the U.K.'s 2017 mandatory gender pay disclosure regulation, combined with high-frequency foot traffic data to individual retail outlets, we show that foot traffic increases to U.S. outlets of firms required to disclose gender pay practices. Consumers reduce visits to firms reporting the highest gaps and reward firms reporting the lowest gaps with more visits, even if the company reports a pay gap unfavorable to women. Local demographic or workforce characteristics like the relative number of women or women in the labor force do not strengthen this baseline effect. Instead, increases in foot traffic are larger in localities with social norms favoring gender equality. Localities with well-educated consumers are more likely to be skeptical of firms reporting low pay gaps and "see through" misreported data. These foot traffic patterns post-disclosure affect managerial decision-making. We document a feedback loop where changes to consumer behavior following disclosure impact firms' future pay practices. Abnormally low foot traffic is predictive of smaller future pay gaps. Collectively, these findings indicate that transparency and equity in pay distributions can serve as a differentiating factor in a firm's brand image. Likewise, our findings demonstrate the usefulness of regulations mandating disclosure of gender pay gaps in providing customers with information relevant to their decision-making.
Presentations: 2023 Joshua T. Beck Northwest Marketing Research Symposium, 2024 Boca-ECGI Corporate Finance and Governance Conference, LMU Munich, 2025 AMA Conference
with Daniel Garrett and Mahdi Shahrabi
Abstract: We study the supply and pricing dynamics for ESG labels using a novel and unexpected third-party assessment of environmental, social, and governance (ESG) characteristics for over $1 trillion in municipal bonds. We show that most eligible bonds are issued without ESG labels and that local beliefs and issuance terms discourage labeling. Using a difference-in-differences design in combination with these assessments, we provide within-bond evidence that reducing ESG-related uncertainty increases investors' willingness to pay. We find a 3–4 basis point premium for assessed bonds, even those with average ESG scores (i.e., ineligible for ESG labels)---which we call an assessment effect. The greenium for higher environmental or transparency scores is smaller but significant. These pricing effects are consistent across local characteristics, but are much larger for revenue bonds with material credit risk. Our evidence highlights the general relevance of ESG information in assessing credit risk and a mismatch between its supply and investor demand.
Presentations: Brookings Institution Municipal Finance Conference 2025, JCF-Bocconi Special Issue Conference 2025, Baruch-JFQA Climate Finance and Sustainability Conference 2025, Princeton University, University of Pennsylvania, Auburn University, Cambridge University, Pennsylvania State University, University of Nebraska Lincoln
