Research

My research work aims to connect academic inquiry with practical applications, in the are of debt contracts and information asymmetry. With my academic and industry experiences, I gain a better understanding and extract qualitative information from companies’ public announcements. I then proceed with my research to examine conflicts between shareholders and creditors. My recent paper studies investigates the impact of initial corporate debt offerings on firms’ debt structure that supports the idea that the information disclosed through a bond IPO alleviates creditor coordination failure. Additionally, I study the strategic acquisition decisions of firms that privately hold their overvaluation information. This study utilizes a novel dataset of purchase obligations, which I manually collected from 10K filings. 

Research Interests

• Empirical Corporate Finance, Debt Contracts,  Climate Finance, and Natural Disasters

• Information Asymmetry, Public Announcements, and Corporate Strategic Behavior

Working Papers

1. Information Asymmetry and Debt Structure: Evidence from Bond IPO (with Eunpyo Hong and Jin-Gil Jeong)

Abstract: We find that firms significantly diversify their debt following a bond IPO. This tendency is more pronounced among the firms with higher bankruptcy risks. Moreover, we observe a reduction in both the number of debt covenants and the tightness for bond IPO firms, particularly those with higher bankruptcy risks. Our results further reveal that these firms increase their total debt issuance, especially in the form of unsecured debt. Overall, our findings support the idea that the information disclosed through a bond IPO alleviates creditor coordination failure, enhances the firm’s liquidation value, reduces the need for stringent monitoring, and ultimately fosters a more diversified debt structure.

• Accepted at FMA 2025, presented at Global Finance Association 2025.

2. Natural Disasters, Covenant Violations, and Bank Loans

Abstract: I examine the propagation of corporate borrowers’ natural disaster risks to their lenders. Using covenant violations caused by natural disasters as a channel that transmits borrowers’ natural disaster risks to lenders, I investigate how lenders respond to these violations. I first find that disaster impacted firms are more likely to violate covenants and experience decreases in financing activities. This leads lenders to impose stricter loan and covenant terms to disaster impacted firms, reflecting their heightened concerns about the natural disaster risks of borrowers. More importantly, I observe different responses from lenders to covenant violations caused by natural disasters depending on firms’ capabilities to access funds. I find that, when firms have higher capabilities, lenders show leniency toward these violations by mitigating loan margin increments after disaster impacts. On the contrary, they restrict funding to firms that do not meet these criteria. These lenders’ heterogeneous responses to the natural disaster risks of borrowers align with the subsequent business performances of the affected borrowers, indicating that lenders accurately assess natural disaster risks and covenant violations of firms. Overall, our findings suggest that lenders do not systematically penalize every climate change risk of borrowers but consider other factors affecting firm recovery.

• Presented at FMA 2024, George Washington U., Georgia College & State Univ.

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3. Overvaluation, Diminishing Profitability, and Acquisitions (with Jiyoon Lee and Micah S. Officer)

Abstract: We find that a firm is more likely to engage in acquisitions when its private information, measured by changes in purchase obligations, predicts that future profitability will fall and thus that its shares are overvalued in the current stock market. Overvalued acquirers are as likely to pay with stock as non-overvalued acquirers, suggesting that these firms do not necessarily take advantage of overvalued stock. Such acquisitions are followed by increases in profitability and generate positive announcement returns that are similar in magnitude to those generated by non-overvalued acquirers. In addition, bidding-period returns on overvalued acquirers are higher than those on similarly overvalued non-acquirers. Being an overvalued acquirer is not associated with executive compensation structure or ownership, suggesting that these acquisitions are less likely to be driven by managers’ private incentives. The results suggest overall that managers engage in acquisitions to boost profitability when their private information predicts diminishing profitability rather than to take advantage of overvaluation and that such acquisitions benefit shareholders.

• Presented at FMA 2023, EFA 2022, George Washington U., Yonsei U.

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4. Propagation of Shareholder Conflicts to Shareholder-Creditor Conflicts

Abstract: This study explores how internal shareholder conflicts propagate into shareholder–creditor conflicts. When firms have multiple shareholders with comparable voting rights, governance frictions may arise, particularly in the presence of blockholders. Using blockholder structures as a proxy for shareholder conflicts, I examine the extent to which such tensions spill over to affect creditor relations. The analysis highlights several potential consequences: the imposition of stricter loan contract terms, a higher incidence of debt contract defaults, and diminished firm survival prospects. By linking intra-shareholder disputes to external financing outcomes, this research provides new insights into the broader implications of ownership structures for firm stability and creditor protection.

5. Purchase Obligations and Supply Chains (with Şenay Ağca, Jiyoon Lee, and Jing Wu)

Abstract: This paper investigates the role of purchase obligations in shaping supply chain dynamics and supplier corporate policies. We analyze how changes in customers’ contractual commitments to purchase goods and services influence suppliers’ financing, investment, and operational decisions. Purchase obligations, by providing greater certainty of demand, may reduce suppliers’ cash flow volatility and borrowing costs, but can also increase dependence on a limited set of customers, thereby amplifying risk exposure. By examining the variation in suppliers’ corporate policies around shifts in customer purchase obligations, we shed light on the broader implications of contractual arrangements in supply chains. Our findings contribute to the understanding of how inter-firm contracts influence firm behavior, risk allocation, and the stability of supply chain networks.

Work in Progress

1. Debt concentration vs. diversification: Trade-off in bank-borrower relations (with Eunypo Hong)

2. Governance structure, creditor control rights, and corporate rehabilitation

3. Impact of past policies on corporate credit access (with Şenay Ağca and Indraneel Chakraborty)

4. Creditor or shareholder? Role of unsecured creditors in a default

5. Governance structure and corporate rehabilitation