2024 / 2025

About Joanna Kusiak (King's College)

Title: Radically Legal: Berlin Constitutes the Future

Abstract: 

Right in the middle of the German constitution, a group of ordinary citizens discovers a forgotten clause that allows them to take 240,000 homes back from multi-billion corporations. In this work of creative non-fiction, scholar-activist and Nine Dots Prize winner Joanna Kusiak tells the story of a grassroots movement that convinced a million Berliners to pop the speculative housing bubble. She offers a vision of urban housing as democratically held commons, legally managed by a radically new institutional model that works through democratic conflicts. Moving between interdisciplinary analysis and her own personal story, Kusiak connects the dots between the past and the present, the local and the global, and shows the potential of radically legal politics as a means of strengthening our democracies and reviving the rule of law. This title is also available as Open Access on Cambridge Core.

Date: Thursday 17 October 2024 at 12:30 - 13:30

Event Location: Room W2.02, Main Cambridge Judge Business School Building

About Francisco Amaral (University of Zurich)

Title: Urban Spatial Distribution of Housing Liquidity

Abstract:

We examine the relation between location, liquidity, and prices in urban housing markets. Leveraging a new dataset that encompasses transactions and advertisements of apartments in large German cities over the last decade, we empirically show  that housing market liquidity and prices jointly decline with distance to the city center. We build a spatial search model to demonstrate how travel costs to the city center explain this joint spatial distribution. We estimate the model and find that it quantitatively matches the data, and that spatial liquidity differences due to search frictions account for a quarter of the spatial price gradient. Finally, we conduct a counterfactual analysis, showing that prices in the city center are 4% to 9% higher than in the periphery due to higher liquidity

Date: Thursday 31 October 2024 at 12:30 - 13:30

Event Location: Room W2.02, Main Cambridge Judge Business School Building

Jesus Crespo Cuaresma (Vienna University of Economic and Business)

Title: Hidden in plain sight: Influential sets in linear regression

Co-Authors: Nikolas Kuschnig (WU Vienna) and Gregor Zens (IIASA)

Abstract:

Influential sets are sets of observations that have considerable impact on econometric results. In this paper, we present a disciplined and insightful method for assessing the sensitivity of regression-based inference to influential sets. We explore algorithmic approaches to identify influential sets, discuss interpretation, and assess the sensitivity of earlier studies to these sets. We apply our method to established results in development economics, and show that results are driven by small influential sets. Identifying and analyzing these sets can reveal potential omitted variable bias, unobserved heterogeneity, a lack of external validity, and technical limitations of the methodological approach used.

Date: Thursday 14 November 2024 at 13:00 - 14:00

Event Location: Castle Teaching Room, Main Cambridge Judge Business School Building

About Constantine Yannelis (University of Chicago)

Title: Student Loan Forgiveness

Co-Authors (All of University of Chicago): Michael Dinerstein, Dmitri Koustas and Samuel Earnst

Abstract:

Student loan forgiveness has been proposed as a means to alleviate soaring student loan burdens. Who benefits from loan forgiveness, and how does it affect borrowers? This paper uses administrative credit bureau data to study the distributional, consumption, borrowing, and employment effects of the largest event of student loan forgiveness in history. Beginning in March 2021, the United States federal government ordered $132 billion in student loans cancelled, or 7.8% of the total $1.7 trillion in outstanding student debt. We find that student loan forgiveness led to increases in mortgage, auto, and credit card debt. We find small or no effects on non-student loan delinquencies. Borrowers' monthly earnings and employment fall. 

Date: Thursday 28 November 2024 at 13:00 - 14:00

Event Location: Castle Teaching Room, Main Cambridge Judge Business School Building

About Ilan Guttman (NYU Stern)

Title: Strategic Disclosure with Fake and Real News

Abstract: 

We develop a model in which information about a rm's value can be obtained

from two sources: (i) voluntary disclosure by a rm's manager, if she is informed, and (ii) an exogenous source - news - with uncertain accuracy, i.e., who may be real or fake. We focus on the case where the accuracy of the news is positively correlated with the manager's information endowment, and the manager makes the disclosure decision without knowing the news. In contrast to the existing theoretical literature, our model does not admit a pure-strategy disclosure equilibrium. Instead, the equilibrium is characterized by two thresholds: an informed manager never discloses values below the lower threshold, always discloses values above the higher threshold, and employs a mixed strategy with a monotonically increasing probability of disclosure for values between the two thresholds. We show that the presence of news crowds out managerial disclosure.

Date: Thursday 30 January 2025 at 12:30 - 13:30

Event Location: Room W2.01, Main Cambridge Judge Business School Building

About Manju Puri (Duke Fuqua) 

Title: Cryptocurrency Ownership

Abstract: 

We report results from a large-scale survey of American households to better understand the nature and drivers of cryptocurrency ownership. The sample includes 1,774 individuals on which data is gathered by the Survey Research Center at the Institute for Social Research, University of Michigan.  We obtain data on crypto ownership and ownership intent alongside a comprehensive suite of attributes. Crypto ownership is related to several variables including demographics, psychological traits and attitudes measured through psychometric tests, literacy, gambling preferences, financial participation and decision-making, political views, and other potential enablers such as regulations, trust, more widespread usage including by different institutions. We discuss the implications for crypto regulation and policy. 

Date: Thursday 13 February 2025 at 12:30 - 13:30

Event Location: Room W2.02, Main Cambridge Judge Business School Building

About Cristina Penasco Paton (Banque de France)

Title: Strategic competition and donor interests: An econometric approach to the market for the allocation of climate development aid for renewable energy projects

Abstract:

The transition to decarbonised economies is essential for economic development in developing economies and it opens venues for developed countries to think strategically about energy and foreign policy in a changing geopolitical context in which energy security and climate targets need to go hand in hand. Analysing how bilateral aid for renewable energy projects is allocated is crucial to understand if donor countries prioritize social and environmental goals or if their motives are less altruistic and focused on their own economic and strategic benefits in the context of the geopolitics of the energy transition and therefore, if they favour targeted development. To examine how official development aid for renewable energy projects (RE ODA) is allocated across countries we pay attention to donor and recipient characteristics and interactions but also to donor-donor strategic relationships. We use an estimation strategy that combines quantitative social network analysis and panel data models (pplmhdfe, Heckman selection and an IV strategy) to examine the technical, economic or geopolitical motives determining the allocation of bilateral aid for projects on non-emitting energy sources from 2009 to 2018 with OECD-CRS data. Using the degree centrality of the recipient, the Herfindahl index and the market share of the donors’ RE ODA on the recipients to measure the concentration of RE ODA and, therefore, the importance of a donor within the recipient’s network, we analyse the motivations behind the strategic donations of countries. We find that both political and strategic trade interests connected to the access to critical minerals, energy resources and policy drivers are factors affecting the targeted provision of ODA for low-and-middle income countries while, generally, recipients’ needs are not relevant factors driving the reception of RE ODA.

Date: Thursday 27 February 2025 at 12:30 - 13:30

Event Location: Room W2.02, Main Cambridge Judge Business School Building

About Reining Petacchi (Georgetown)

Title: Measuring the Informativeness of Audit Reports: A Machine Learning Approach

Abstract:

This paper studies the informational value of audit reports using computational linguistic tools based on FinBERT, a cutting-edge large language model (LLM) designed for financial texts. We analyze the topics within audit reports and classify them into 41 labels, organized into standard and expanded components. The standard components contain boilerplate language on audit scope, opinion, and basis for opinion. In contrast, the expanded components contain explanatory language, audit matters, and discussions of audit procedures that reflect auditor judgment. Contrary to the perception that audit reports lack informational value, we find that changes from the addition of new sentences in the expanded components carry strong implications for the client firms’ future performance and misstatement risk. Firms with larger changes in the expanded components exhibit poorer future returns, less persistent operating performance, and a higher likelihood of future financial restatements. These changes trigger investor trading, reducing bid-ask spreads around the audit report releases. Both regulatory influences and litigation pressures drive these changes, underscoring the role of both public and private oversight in enhancing audit report informativeness.

Date: Thursday 13 March 2025 at 13:00 - 14:00

Event Location: Castle Teaching Room, Main Cambridge Judge Business School Building

About Pedro Gete (IE University)

Title: Farmland as an Asset Class: Investors, Returns and Real Effects

Abstract:

Farmland as an asset class is increasingly popular. We show that U.S. agricultural real estate prices have grown significantly faster than residential real estate prices over the last 130 years, but their growth exhibits less cross-sectional dispersion than residential real estate price growth. These results hold in multiple datasets and time sub-periods. Then, we study the California boom in tree nuts that began during the mid-2010s drought. We show that over-investment depleted groundwater. Large investors with little ex-ante exposure to nuts drive the boom. These new nut investors account for one-fifth of all agricultural well drilling in California over 2013-2023, and nut farms overall account for half of agricultural well drilling. The market as a whole overestimates the persistence of the boom, and large new nut investors are more prone to overreact to this optimism because they can expand nut supply more elastically. Overall, these findings point to significant environmental impacts of investment booms, amplified by large, optimistic newcomers.

Date: Thursday 8 May 2025 at 13:00 - 14:00

Event Location: Room W2.01, Main Cambridge Judge Business School Building

About M. Hashem Pesaran (USC)

Title: Identifying and exploiting alpha in linear asset pricing models with many potential risk factors

Abstract:

We consider a decomposition of the risk premia of traded factors as the sum of factor means and a parameter vector we denote by phi, which we identify from the cross-section regression of alpha on the vector of factor loadings, betas. If phi is non-zero, then alpha must also be non-zero and one can construct ”phi-portfolios” which exploit the systematic components of non-zero alpha. We show that for known values of betas and when phi is non-zero, there exist phi-portfolios that dominate mean-variance portfolios. The paper then proposes a two-step bias corrected estimator of phi and derives its asymptotic distribution allowing for idiosyncratic pricing errors, weak missing factors, and weak error cross-sectional dependence. Small sample results from extensive Monte Carlo experiments show that the proposed estimator has the correct size with good power properties. The paper then provides an empirical application to a large number of U.S. securities with risk factors selected from a large number of potential risk factors according to their strength and constructs phi-portfolios and compares their Sharpe ratios to mean variance and S&P portfolios.

Date: Thursday 22 May 2025 at 13:00 - 14:00

Event Location: Room W4.05, Main Cambridge Judge Business School Building

About Murillo Campello (University of Florida)

Title: Tax Incentives and Venture Capital Risk-Taking

Abstract:

Can tax subsidies prompt investors to fund riskier ventures? We answer this question under a framework in which venture capitalists (VCs) combine outside funding with incentive-based compensation and study a policy change that eliminated capital gains taxes on certain startup investments. Using bunching methods, regression discontinuity designs, and a triple-differences design exploiting industry eligibility, investment year, and holding requirements, we analyze data from 158 thousand investor—firm pairings over two decades. We first identify strategic investment timing, with tax subsidies prompting concentration at required holding-period thresholds. We then document strategic capital allocation, with investments just below the eligibility threshold receiving more follow-on funding than those just above. When and where tax subsidies apply, VCs shift their project selection toward riskier ventures: they increase investments in pre-commercial stage startups and firms carrying pre-existing debt. They also become more likely to invest across state lines, provide a company’s first institutional funding, and invest as sole financiers, while becoming less likely to require equal footing (pari passu) contract terms. In turn, their portfolio companies show higher failure rates and greater multi-year funding gaps. The increased risk-taking yields salient return outcomes: tax-subsidized VC-backed ventures attain high exit values and are more likely to reach “unicorn status.” None of these patterns are observed for comparable non-VC investors receiving the same tax subsidies. Data on board-voting rights and executive turnover suggest that observed outcomes do not stem from changes in post-investment governance or monitoring activities. Our study is the first to show that tax policy can shift entrepreneurial financing toward riskier, more experimental, valuable ventures, with outcomes shaped by investor organizational structure and incentives.

Date: Thursday 5 June 2025 at 12:30 - 13:30

Event Location: Room W2.02, Main Cambridge Judge Business School Building

About Thomas Hemmer (Rice Business)

Title: Aggregation and Convexity in the Provision of Dynamic Incentives

Abstract:

In this paper I identify an alternative preference structure that preserves most of the cherished simplicity of the formulation of the Principal-Agent problem pioneered by Holmström and Milgrom (1987). The main advantage of my approach is in relation to the structure of the optimal contract: it adds a convex component to their optimal linear contract. This provides new opportunities to revisit empirical predictions and studies based off of their linear formulation and to demonstrate how the empirical irregularities may be at least partially explained by this one additional component identified here.

Date: Thursday 19 June 2025 at 13:00 - 14:00

Event Location: Room W2.01, Main Cambridge Judge Business School Building