Research
Research
WORKING PAPERS
The Economic Costs of Mass Shootings: Evidence from U.S. Housing Markets, joint with Kose John
Abstract: We study the impact of mass shootings on local housing markets using ZIP-level monthly data from 2017–2023 and a matched-control design. Following an incident, markets cool as buyer interest diminishes and sellers respond with slower listings, longer time on market, and greater price concessions. Listing prices decline, showing that weaker demand outweighs any temporary supply pullback. These effects extend the household finance literature by demonstrating that highly salient, extreme forms of gun violence trigger immediate demand–supply adjustments that erode housing-market liquidity and home values. Mass shootings thus impose significant economic costs, reducing household wealth and weakening local resilience beyond their human toll.
Abstract: Firms with a stronger corporate culture face harsher regulatory penalties for misconduct. This suggests that regulators impose stricter penalties on firms with strong ethical reputations—reflected in their corporate culture—to deter corporate hypocrisy and uphold public trust. We find that this effect is primarily driven by companies with a stronger innovation or teamwork culture. However, this effect weakens when firms with a stronger corporate culture avoid negative media coverage. Additionally, we document that investors hold these firms to higher ethical standards, amplifying reputational penalties when misconduct occurs. Our results remain robust to econometric challenges, including concerns about the endogeneity of corporate culture.
Financial Flexibility in the Gig Economy: The Impact of Ridesharing on Mortgage Loan Terms, solo-authored
Abstract: We examine how lenders consider borrowers' ability to supplement income through ridesharing during financial challenges when setting mortgage interest rates. By leveraging the staggered enactment of driver-friendly gig economy laws, which prohibit restrictive local regulations on ridesharing and lower entry barriers for drivers, we identify this effect. Using a difference-in-differences regression model, we find causal evidence that these laws lead to lower mortgage interest rates. This suggests that lenders may view these laws as reducing borrowers' default risk. The result remains robust when using mortgage spreads as a proxy for mortgage risk premiums instead of rates and addressing econometric challenges.
Balancing Risk and Reputation: Corporate Board Gender Diversity in the Face of Sexual Harassment Litigation, joint with Stefano Bonini and Kose John
Abstract: We show that an increase in local sexual harassment litigation decreases the likelihood of appointing a female board director, particularly in firms with a higher proportion of female board members. We measure the impact of the #MeToo movement using an anti-sexual harassment legal index. This effect is more pronounced in states with varied anti-sexual harassment laws and in federal district courts with more female judges, judges appointed by Democratic presidents, or judges with longer tenures. Conversely, the effect weakens in courts with a higher proportion of white or younger judges, or with fewer highly qualified judges.
Polls, Politics and SBA Disaster Loans, joint with J. Jay Choi, Kose John, and S. Abraham (Avri) Ravid
Abstract: This paper examines the effect of the popularity of the president, measured by the presidential job approval polls, on the generosity of SBA disaster loans. Using data from 1991 to 2020, we find a negative effect of presidential popularity (prior to a major natural disaster) on loans granted after a natural disaster declaration. We also investigate the effects of other political factors, such as second-term presidencies and party affiliation, which are also significant. Local political and economic variables influence the outcomes as well. Our main analysis is supported by IV regressions to address potential endogeneity.
Labor representation, management, leverage, and employee outcomes, joint with Kose John and S. Abraham (Avri) Ravid
Abstract: This paper studies the interaction of labor representation in management with debt structure in affecting labor outcomes. We focus on the Belgian Works Councils that provide elected employee representatives with significant voice on certain corporate policies and labor outcomes. We find that the Works Council increases employee turnover, which is consistent with management-labor cooperation and increased managerial flexibility. However, debt structure (the different components of debt, as opposed to total leverage) can be used to increase management bargaining power and discipline labor when the Works council is not effective. In some settings, short term debt and the Works Council are substitutes. Supporting evidence is also presented from a regression discontinuity analysis of the composition of the works council in terms of political affiliation, gender and age.
The effect of the repeal of the SALT deduction on the sale price of properties, solo authored
Abstract: The Tax Cuts and Jobs Act of 2017 eliminated the full itemized deductibility of city-paid property taxes. This study examines the effect of this repeal on property sales prices, using a sample of 622,766 property transactions in New York City between 2007 and 2020. The findings indicate that the repeal of the preferential tax treatment for property taxes led to a decrease in property sales prices. The after-tax cost of property ownership increased following the deduction's repeal. The impact is more pronounced for properties that are recently built, have a greater number of residential units, or include fewer commercial units.
Capital structure of nonprofit organizations, solo authored
Abstract: This paper examines the capital structure choices of nonprofit organizations. We find that these organizations tend to use less debt when they are more mature, possess a higher capacity for self-financing, or face a lower risk of financial distress. Additionally, nonprofit organizations exhibit a time-varying optimal target level of leverage and demonstrate a rapid adjustment toward this target. Our findings suggest that nonprofit organizations require between 0.4 and 0.8 years to offset half of the impact of a shock on their leverage. This indicates a highly proactive approach by individual decision-makers within nonprofit organizations in managing their capital structures.
PUBLICATIONS
Retail motor gasoline prices and the interest rate on mortgage loans, European Financial Management, 2024, solo-authored (Impact Factor: 3.1) -> Podcast
What is the causal relationship between the retail price of motor gasoline and the interest rate on mortgage loans?
How do government policies designed to promote alternative fuels affect this relationship?
What are the moderating effects of different transportation modes on the relationship between gasoline prices and mortgage interest rates?
Abstract: A significant negative relationship exists between the price of retail motor gasoline and the interest rate on mortgage loans. Prospective homeowners avoid purchasing a mortgage-financed home in areas where gasoline prices are rising to avoid endangering their future mortgage payments due to the greater cost of motor fuel consumption. The passage of government regulations and incentives aimed at increasing either the demand for or supply of alternative fuels, lowering the cost for gasoline customers to switch to alternative fuels, lessens the negative impact of gasoline prices on the cost of mortgage credit. Public transit mitigates the negative gasoline price impact.
Firm Leverage and Employee Pay: The Moderating Role of CEO Leadership Style, 2024, joint with J. Jay Choi and Kose John, International Review of Financial Analysis, (Impact Factor: 9.8) -> Podcast
How do different CEO leadership styles impact the relationship between firm leverage and average employee pay?
What are the key arguments for and against the ‘debt disciplinary’ and ‘employment security’ hypotheses regarding leverage and employee pay?
How do firm-specific and country-specific factors, beyond CEO leadership styles, influence the relationship between leverage and employee pay?
Abstract: We investigate how a CEO's leadership style moderates the relationship between leverage and average employee pay. We first show that the relationship between leverage and average employee pay is negative, consistent with the leverage disciplinary hypothesis. Next, we examine how CEO leadership style moderates this negative effect. We find that CEOs with more charisma reduce the disciplinary effect of leverage. The humane CEOs of companies with more debt sharpen the disciplinary effect by paying their employees less for increased risk of job loss that comes with high leverage. An important policy implication is that CEO leadership style can influence the outcome of labor management negotiations regarding employee pay.
COVID-19 mortality risk premium and the interest rate on mortgage loans. International Review of Financial Analysis, 2024, solo-authored (Impact Factor: 9.8) -> Podcast
How did the COVID-19 pandemic impact mortgage interest rates in the US?
What mechanisms explain the relationship between COVID-19 fatality rates and mortgage interest rates?
Did public health policies influence the COVID-19 mortality risk premium on mortgage loans?
Abstract: I investigate the impact of COVID-19 on the housing market, with a focus on mortgage interest rates. Rising COVID-19 fatalities result in higher mortgage interest rates. I use the Gaussian Copula approach to establish causality between COVID-19 fatalities and mortgage interest rates. Finally, I present a thorough examination of the mechanisms by which COVID-19 fatalities influence mortgage interest rates. The health concern channel is the most important. Banks raise the interest rate because they are concerned about the borrower's health or potential death. Lower interest rates for borrowers who alleviated this type of worry from banks by purchasing mortgage insurance.
Natural Disasters, Public Attention and Changes in Capital Structure: International Evidence, Annals of Finance, 2024, solo-authored -> Podcast
What is the relationship between public attention to local natural disasters and the likelihood of affected firms using external financing?
How does the type of online information source used by the public affect the relationship between public attention to a natural disaster and the likelihood of firms using external financing?
What is the impact of public attention on the relationship between natural disaster intensity and the likelihood of smaller firms using external financing?
Abstract: In this study, I examine whether public attention to a natural disaster affects the likelihood of firms using external financing (only debt, only equity, or a mix of debt and equity) following the disaster. The helpful (or harmful) view of public attention predicts that increasing public attention to the disaster can help companies to use (or hinder them from using) external financing following the disaster. For this investigation, I construct two indices: (1) an index of public attention to natural disasters and (2) an index of natural disaster intensity. Consistent with the prediction of the helpful view, the likelihood of using a combination of debt and equity financing in the aftermath of a severe disaster is higher when people pay more attention to it. By contrast, when people pay less attention to severe disasters, firms are more likely to use only debt or equity financing, which confirms the harmful view. I provide evidence that the moderating effect of public attention on the relationship between the likelihood of using external financing and natural disaster intensity varies across types of natural disasters and types of online information sources (websites, online news, images, and YouTube videos). Furthermore, smaller firms that often face difficulties obtaining external financing are more likely to benefit from increased public attention to disasters when they want to use only debt financing and less likely to benefit when using equity financing. Finally, I provide evidence that the substitution of internal funding sources for external sources in the aftermath of a disaster depends on the level of public attention to the disaster.
Health uninsurance premium and mortgage interest rates. International Review of Financial Analysis, 2023, solo-authored (Impact Factor: 9.8) -> Podcast
How does the percentage of uninsured individuals in an area affect mortgage interest rates?
What factors besides health insurance status influence the interest rate charged on a mortgage?
How does the Patient Protection and Affordable Care Act impact the relationship between health insurance status and mortgage interest rates?
Abstract: I show that lenders charge higher interest rates on mortgage-financed houses in areas with a higher rate of health uninsurance to protect themselves against a potential future bankruptcy of the borrower caused by health uninsurance. The health uninsurance premium is higher for applicants who are more likely to file for bankruptcy and for mortgage-financed houses in areas where there are greater benefits to obtaining insurance or where there is a higher percentage of uninsured people who cannot afford insurance. The premium is lower following the implementation of the requirement to have qualifying health insurance coverage under the Affordable Care Act.