Reseach Interests

investor behavior, portfolio choice, sustainable finance, labor finance

Working Papers

The Sustainability Preferences of Individual and Institutional Investors (SSRN)

(with M. Groen-Xu)

*previously: Investors in Green Bonds 

Using data on the universe of Norwegian bondholders, we document a "green volatility effect": green bond investors hold significantly more volatile portfolios than conventional investors. This excess volatility is driven by individuals, whereas funds with green bonds exhibit no significant excess variance. A theoretical framework with non-pecuniary preferences and fiduciary constraints explains this divergence. In our setup, the non-pecuniary benefits shield green investors against financial risk thus increasing overall portfolio variance. For delegated funds, however, fiduciary duty penalizes deviations from the benchmark and thus attenuates the non-pecuniary utility shield. Our results highlight how fiduciary duty can create a fundamental wedge between retail non-pecuniary intent and institutional execution. 

Human Capital Acquisition in VC-backed Companies (SSRN)

(with F. Core and S. Wang)

We study how start-ups restructure their workforce around their first VC deal. Using resume-level data, we show that post-funding growth occurs through bottom-up organizational restructuring rather than proportional scaling. Before receiving capital, start-ups operate as flat, top-heavy entities heavily concentrated in senior technical roles. Following the deal, employment expands by 75\% relative to benchmark firms, with VC-backed firms adding both new seniority layers and functional departments. Crucially, new hiring is concentrated in junior positions and support functions, filling out the lower ranks of the hierarchy. This expansion alters workforce composition through two distinct mechanisms: the share of women increases even within identical roles, whereas racial diversification is driven primarily by shifting departmental composition. Together, these findings demonstrate how VC financing transforms flat, founder-centric technical teams into formalized, multi-tiered organizations.

Restructuring Outcomes under Cross-Security Debt Ownership

(with M. Groen-Xu)

We study restructuring in the presence of multi-class investors (investors in both senior and junior debt). Using novel data of the universe of holdings and transactions in Norwegian bonds, we document that multi-class investors are not only common but hold the majority of the senior class in most Norwegian restructuring events. We propose a simple theoretical framework in which multi-class investors differ in incentives from single-class investors: they are more likely to vote against other senior bondholders in the interest of junior bondholders, who are more likely to benefit from continuation. We provide causal evidence that controlling multi-class stakes in the senior class indeed lowers the likelihood of bankruptcy. To do so, we instrument multi-class ownership with redemptions in unrelated bonds that create available capital in cross-class investors at the time of issuance. Our findings suggest that lenders actively bargain across securities, reshaping both the dynamics and outcomes of debt restructurings.

Direct and Indirect Stockholdings

(with D. Zhang)

Using Norwegian administrative data from 2003 to 2015, we examine household allocations between directly held stocks and mutual funds. We document that younger cohorts invest markedly less in direct stocks than older generations at identical life-cycle stages. Leveraging individual-level wealth shocks during the Great Financial Crisis, we uncover a pronounced asymmetry: younger cohorts are significantly more likely to exit after losses in directly held stocks, whereas responses to mutual fund losses elicit no generational divergence. These patterns are consistent with experiential learning theory and indicate that financial scarring is vehicle dependent. The specific mode of equity exposure, rather than aggregate market risk alone, shapes crisis responses.

The Ownership and Returns of Unlisted Equity

(with V. Balasubramaniam and D. Zhang)

We study the ownership of unlisted shares using the universe of Norwegian private-firm equity linked to registry data on owners' demographics, wealth, and listed portfolios, 2004--2015. Ownership is organized by strong observable clienteles: a cross-sectional factor model explains around ninety percent of variation in who holds which firm, and geography ranks among the strongest sorting dimensions. Yet this sorting does not aggregate. The co-holding matrix has a flat eigenvalue spectrum and investor tilts do not compress into common components: the market is thousands of segmented local pockets, not an integrated market with factors. Observing both sides of the household balance sheet, we find the unlisted stake and the listed portfolio are unrelated in holdings, in characteristic space, and in returns, so the listed portfolio diversifies the private stake in outcome, without any visible hedging motive. The consequences are priced where the wealth sits: the median return gap between a household's unlisted and listed holdings is close to zero everywhere, and the mean gap turns negative in the top wealth decile. Households hold large, illiquid, undiversifiable private stakes that pay no premium over their own listed portfolios.

The Gender Gap in Savings of Entrepreneurs (preliminary draft)

(with R. Almeida and M. Groen-Xu)

We investigate the gender differences in saving rates of entrepreneurial households. We use microdata from households in the UK, where entrepreneurship is high relative to most developed countries.  We show female entrepreneurs have higher saving rates than male entrepreneurs and workers from both genders. We find empirical evidence that this relation arises from  female entrepreneurs saving more one year before becoming business owners. We also show that lower socioeconomic status is associated with higher saving rates of self-employed women. In addition, we find that the risk of owning a business is a relevant factor as the presence of a business partner removes the gender gap. We then examine the implications of the gap. Female entrepreneurs are on average richer than female workers. Despite more savings, female entrepreneurs are poorer than male ones. Household dynamics showing that female entrepreneurs are more likely to transfer money within the household compared to male entrepreneurs is one potential reason for their compromised ability to grow personal wealth.

The Role of Local Banking in Timing of Investment

(with K. Kalisiak)

We show that access to local financing affects firms' investment timing decisions. Firms in areas with better-developed local banking sectors respond earlier to future improvement in investment opportunities. They start new investments at the time the improvement is announced. Other firms catch up only after the improvement and associated cash flows are realized. We exploit variation caused by infrastructure development in the oil industry that exogenously affects firms in only one region and use nearby regions as control. The event creates a gap between announcement and realization dates in which credit demand increases, but credit supply stays unchanged. This specific structure highlights the role of financial constraints and eliminates the problem of reverse causality.

Work in progress

The Impact of Uncertainty on Labour Reallocation and Firm Employment Decisions.

(with S. Wang and L. Zhong)

Permanent working papers

Strategic Overbidding in Procurement Auctions?

I find evidence that cash constrained firms compromise long-term profitability to improve their short-term liquidity. I document that constrained firms overbid in government procurement when market conditions deteriorate. New contracts improve short-term cash flows, but result in lower long-term profits. I provide an unbiased estimate of the drop in performance of winners following an award by measuring performance relative to companies which placed second in the auction. I show that financial constraints predict aggressive bidding, that firms overbid less in auctions that require larger deposits, and that winning long-term contracts causes a short-term increase and subsequent decline in profitability. My results offer a non-behavioural explanation for the ``winner's curse''.

Firm Behaviour after R&D Breakthroughs.

I examine firm behaviour after major R&D breakthroughs. I use the example of pharmaceutical companies that carry out last-stage clinical trials for new oncology drugs. "Success" is defined as Food and Drug Administration approval to market new drugs. I argue that this alternative innovation measure is superior to commonly used patents and citations. Companies that obtain approval increase capital expenditure. However, there is no change to their research and development expenses, cash holdings, or short-term investments. This supports the hypothesis that innovative firms follow long-term strategies, and finalizing drug development, even though infrequent, does not radically change their behaviour.