Working Paper and Publications

Working Paper (selected)

Does Speculative News Hurt Productivity? Evidence from Takeover Rumors (with Christian Andres, Dmitry Bazhutov, Douglas Cumming, and Peter Limbach)

We show that productivity at both the firm and employee (i.e., analyst and inventor) level temporarily declines upon announcements of takeover rumors that do not materialize. Such speculative news may hurt productivity because uncertainty and threat of job loss cause anxiety, distraction, and reduced commitment among employees and managers. Consistently, we observe a more pronounced productivity dip for rumored targets and when the likelihood of job loss is higher. Firm performance mirrors these results. We find no indication of reverse causality. The evidence fosters our understanding of potential real effects of speculative financial news and the costs of takeover threats. 

Traditional Investment Research and Social Networks: Evidence from Facebook Connections (with Travis Dyer and Peter Limbach)

We show that investors acquire more public information about firms to which they are more socially proximate. On average, a standard deviation increase in the Social Connectedness Index (Bailey et al., 2018) between a firm’s headquarter county and a searcher county is associated with 30% more EDGAR filing downloads from the searcher county. The effect of social proximity on traditional investment research is distinct from the effect of geographic proximity. We find similar results studying headquarter relocations, investor-level data, and EDGAR downloads from European regions, for which physical distance should be irrelevant. Social proximity matters more during times of high market-wide uncertainty and for firms with weaker information environments. Finally, information gathered by socially proximate investors predicts short-term earnings and stock returns, but also heightened volatility. Collectively, the evidence indicates that social networks mitigate informational frictions and foster information acquisition in financial markets. 

Institutional Investor Distraction and Unethical Business Practices: Evidence from Stakeholder-Related Misconduct (with Daniel Neukirchen and Peter N. Posch)

We exploit exogenous shocks to institutional investors’ portfolios to show that managers engage in significantly more stakeholder-related misconduct when institutional investors are distracted. The relationship is more pronounced (i) for firms where managers are more enticed to commit wrongdoing or have more outside options in the executive labor market, and (ii) for firms with weak internal and external governance. Furthermore, we find that during these periods of institutional distraction, managers are particularly likely to engage in misconduct detrimental to employees. Overall, our evidence suggests that institutional investors are important monitors of management and prevent misconduct detrimental to both shareholders and stakeholders. 

Find further working papers in my CV (currently not available).

Publications (selected)

How does corporate culture affect IPO price formation? (with Douglas Cumming, Daniel Neukirchen, and Peter N. Posch)

Journal of Banking & Finance (2024)

We examine the relationship between corporate culture and initial public offering (IPO) price formation. Using a sample of 935 US IPOs and data on corporate culture from Li et al. (2021b), we find that IPOs of strong culture firms are associated with more positive price revisions and higher initial returns, i.e., more underpricing. These findings hold using an alternative measure of corporate culture, matched samples, and a large set of control variables. Consistent with key theories, the effects appear to be driven by underwriters deliberately compensating investors for revealing information about their perceptions of the firm's culture during bookbuilding.

Do Institutional Investors Care About Operational Leanness? (with Daniel Neukirchen and Peter N. Posch)

British Journal of Management (2023)

We investigate the relationship between operational leanness and institutional ownership. Based on a sample of 12,291 firm-year observations of US manufacturing firms from 1998 to 2020, we find leaner firms to attract significantly more institutional investors – both in terms of the fraction of shares held and the number of institutional investors holding shares of the firm. This finding holds in several tests addressing endogeneity concerns. Contrary to studies investigating the relationship between operational leanness and operating performance or credit ratings, our results do not provide consistent evidence that this relationship is also of a concave shape. However, we provide evidence that the relationship is stronger (i) for firms with weak corporate governance and high firm-specific monitoring costs and (ii) for active institutions, suggesting that not only firm performance considerations but also perceived lower agency costs are important mechanisms explaining why institutional investors prefer lean manufacturing firms. Taken together, these findings contribute to our understanding of institutional investors’ preferences in general and across institution types.

Find further publications in my CV (currently not available).

Awards and Honors

• Admission to the Global Young Faculty of the Mercator Foundation from October 2021

• Best Dissertation Award 2021, Department of Business and Economics, TU Dortmund University

• Valedictorian of Class 2017, Business Mathematics, TU Dortmund University