Research

My research interests lie in empirical corporate finance, specialized in debt contracts. 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 the strategic behaviors of firms and their counterparties.

My job market paper studies how lenders respond differently to borrowers’ covenant violations after natural disasters. I employ machine learning techniques to collect violation and find that lenders do not systematically penalize covenant violations driven by natural disaster impacts. 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


Working Papers


1. Natural Disasters, Covenant Violations, and Bank Loans (job market paper)

Abstract: We 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, we investigate how lenders respond to these violations. We 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, we observe different responses from lenders to covenant violations caused by natural disasters depending on firms’ capabilities to access funds. We 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. 


2. 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.

Work in Progress


1. Propagation of shareholder conflicts to shareholder-creditor conflicts

Shareholder conflicts can arise when a greater number of shareholders possess comparable voting rights within firms. By using the presence of blockholders as a proxy for shareholder conflicts, I investigate how these conflicts may extend to affect shareholder-creditor dynamics. This phenomenon could lead to the implementation of more stringent loan contracts, an increased occurrence of debt contract defaults, or even an impact on the survival rates of the firms involved.


2. Impact of past policies on corporate credit access  (with Senay Agca and Indraneel Chakraborty)

We explore the impact of past policies on corporate credit access using a granular large comprehensive dataset on bank credit lines.


3. Purchase obligations and supply chains (with Senay Agca, Jiyoon Lee, and Jing Wu)

We examine how changes in customers’ purchase obligations affect suppliers’ corporate policies to understand the implications of purchase obligations in supply chains.