Selected Published Articles


Good for your Fiscal Health? The Effect of the Affordable Care Act on Healthcare Borrowing Costs

Coauthored with Pengjie Gao from University of Notre Dame and Dermot Murphy from UIC, Journal of Financial Economics (2022) 



We study healthcare borrowing costs around the Affordable Care Act (ACA). The ACA provides insurance subsidies to low-income residents. States could accept funding to expand Medicaid, although many declined, citing the cost burden. The ACA significantly decreased healthcare borrowing costs after a favorable 2012 Supreme Court ruling. Furthermore, hospital investment spending increased, and investment sensitivity to cash flows decreased. The yield effect was double in Medicaid-expansion states, and insignificant in rural areas which lack insurance competition. Our results highlight how the municipal market can be used to evaluate the heterogeneous effects of public policy and guide a targeted policy approach.


Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance

Coauthored with Pengjie Gao from University of Notre Dame and Dermot Murphy from UIC, Journal of Financial Economics (2020)



This paper examines how local newspaper closures affect public finance outcomes for local governments. Local newspapers in the United States have been steadily declining in recent years, with circulation numbers down approximately 27% from 2003 to 2014. Other studies have shown that the loss of a local newspaper leads to worsened political outcomes in the region, and we illustrate that there are worsened finance outcomes as well. Specifically, following a newspaper closure, municipal borrowing costs increase by 5 to 11 basis points, costing the municipality an additional $650 thousand per issue. Overall, our results indicate that local newspapers hold their governments accountable, keeping municipal borrowing costs low and ultimately saving local taxpayers money.


Municipal Borrowing Costs and State Policies for Distressed Municipalities

Coauthored with Pengjie Gao from University of Notre Dame and Dermot Murphy from UIC, Journal of Financial Economics (2018)



This paper investigates the different state laws for dealing with distressed local governments and the effect of these laws on municipal defaults and borrowing costs. Recent high-profile municipal default cases in Detroit, Puerto Rico, and various cities in California have underscored the importance of default risk in municipal bond markets. Yet, the political and institutional details of municipal default proceedings and their effects on municipal borrowing costs have not been investigated in the literature. This paper fills this gap by examining differences in distress-related laws and statutes across states.



Selected Working Papers


Local Newspaper Closures and Audit Pricing

Coauthored with Wonhyeong Kim from Emory Univesity, Yongtae Kim from Ssanta Clara University, and Hyung Il Oh from Korea Advanced Institute of Science and Technology


This paper investigates the media’s influence on auditors. Local newspapers play an irreplaceable role by providing original and investigative coverage of local affairs and holding local governments and businesses accountable. However, the rise of other advertising platforms has disrupted this industry, leading to over 20% of local newspapers shutting down in the past 15 years. We find that local newspaper closures are associated with higher audit fees, as the loss of external monitoring increases perceived audit risk, particularly for geographically concentrated firms and those with weak board oversight. Our results highlights the important monitoring role local newspapers play in the capital market.


Disruptive Technology, Long-Run Risk, and Asset Pricing

Coauthored with Sangheum Cho from Bank of Korea and Soohun Kim from Korea Advanced Institute of Science and Technology


This paper examines the asset pricing implications of Investment Specific Technology (IST) news shocks within the framework of long-run consumption risk. Prior research suggests common external factors that drive long-term consumption growth, influence business cycles, shape firm cash flows, and contribute to the equity risk premium. We propose that IST news shocks - anticipated but not yet realized technological developments in producing investment goods - represent one such key factor. Using a structural VAR approach, we identify IST news shocks as a major source of long-run consumption growth, accounting for 50–60% of long-run consumption movements. Consistent with the long-run consumption risk hypothesis, these shocks carry a significantly positive risk premium in the cross section of stock returns through their impact on firms' cash flow news. This paper links asset prices to the real economy by showing how a fundamental macroeconomic shock helps explain patterns in expected returns.


Characteristics of Cash Flow News and Information Environment

Coauthored with Inmoo Lee from KAIST


This paper examines how the nature of a firm’s cash flow news affects the informational advantages of insiders. Stock prices reflect both cash flow news and discount rate news. Research shows that cash flow news is more important for long-term returns, while discount rate news primarily affects short-term price movements. Since insiders are restricted from short-term trading, they are incentivized to focus on private information related to cash flow news. However, recent studies suggest that a significant portion of firms’ cash flow news is systematic. When a firm’s cash flow news closely tracks that of its peer firms, insiders' informational advantages may diminish. Consistent with this conjecture, we find that insider trading is less profitable when a firm's cash flow news is more sensitive to industry-wide cash flow news, particularly in firms with opaque information environments. To the best of our knowledge, this is the first paper to present evidence on how the characteristics of a firm’s cash flow news impact its informational environment.


Two Trees and Two Fruits


This paper examines how the returns of different industries that produce different goods are determined in a general equilibrium model. By relaxing the single good assumption of traditional asset pricing models, this paper shows the central role of imperfect substitutability between different goods in asset pricing.