Trung Nguyen

Assistant Professor of Business Administration

Curriculum Vitae

Harvard Business School

Boston, MA 02163

Email: tnguyen@hbs.edu

Trung Nguyen is an assistant professor of business administration in the Accounting & Management Unit. She teaches the Financial Reporting and Control course in the MBA required curriculum.

Professor Nguyen’s research interests include financial misconduct, government regulation and enforcement, corporate governance, and behavioral biases in financial markets. More specifically, she studies the relationship between financial regulatory and enforcement agencies’ behavior and financial fraud. In addition, her research explores the effects of financial fraud and accounting violations disclosure on investors’ corporate governance efforts and investment choices. She also studies the incentives for and determinants of private information disclosure by managers. 

Professor Nguyen’s work has been featured in Bloomberg.

Professor Nguyen earned a Ph.D. in business administration from Stanford University, Graduate School of Business and a B.A. in economics from Harvard University.

Research Interest

Financial accounting, capital markets, government regulation and enforcement, corporate fraud, crime, information disclosure, behavioral bias and learning


Published/Accepted Papers

The Effectiveness of White-Collar Crime Enforcement: Evidence from the War on Terror

This paper studies the deterrent effect of criminal enforcement on white-collar criminal activities. Using the 9/11 terrorist attacks as a shock to the FBI's allocation of investigative resources and priorities, and variations in the Muslim population in the United States as a measure of geographic variations in the shock, I examine two questions: (1) Does the bureau's shift to counter-terrorism investigations after 9/11 lead to a reduction in the enforcement of laws targeting white-collar crime? (2) Does white-collar crime increase as a result of less oversight? Using a difference-in-differences estimation approach, I find that there is a significantly greater reduction in white-collar criminal cases referred by FBI field offices that shift their investigative focus away from white-collar crime to counter-terrorism. I also find that areas overseen by FBI field offices that shift their attention from white-collar crime to counter-terrorism experience a significantly greater increase in wire fraud, illegal insider trading activities, and fraud within financial institutions.

How Does Judges' Personal Exposure to Financial Fraud Affect White-Collar Sentencing?, with Aneesh Raghunandan and Alexa Scherf

We study whether federal judges’ personal exposure to financial fraud affects sentencing outcomes in white-collar cases. We first assemble, through both machine learning tools and extensive hand collection, two novel datasets: (i) individual judges’ asset ownership from 2003 through 2016 and (ii) case-level sentencing outcomes over the same period. We use this data to construct a novel measure of financial fraud exposure based on judges’ direct shareholdings in firms that commit securities fraud. Using this measure, we exploit the random assignment of cases to judges to examine whether judges’ exposed to fraud in one firm (i) are less likely to rule in favor of defendants in white-collar cases involving other firms and (ii) less likely to grant favorable pre-trial motions to defendants. To test whether the loss of trust associated with judges’ ‘victimhood experience’ is the mechanism underlying our results, we (i) compare our treatment sample against judges with indirect ownership of fraud firms via mutual funds and (ii) examine whether our treatment effect is concentrated amongst judges who are informed investors. Our study broadens our understanding of the spillover effects of financial fraud enforcement and contributes to the literature on how judges’ personal experiences can shape judicial decision-making.



Working Papers

Do Disruptive Climate Events Affect Environmental Regulators' Monitoring?, with Grace Fan and Xi Wu.

We examine how experiences with disruptive climate events impact the Environmental Protection Agency’s (EPA) monitoring activities. Using a difference-in-differences research design and exogenous variation in the exposure of EPA regional offices to major hurricanes, we find that exposed EPA regulators increase their monitoring efforts, measured by both inspection frequency and length, at facilities in their jurisdictions that are not struck by the disasters (non-exposed facilities). The effects are greater for regional offices located closer to the disaster zone, where the effect of the disaster is likely to be more salient. Moreover, regional offices that are exposed to major hurricanes are more likely to take enforcement actions against non-exposed facilities in their jurisdictions. Our results are consistent with EPA regulators changing their risk perception of regulated facilities following disruptive climate events and exerting more monitoring efforts. We also find that these non-exposed facilities release fewer toxic chemicals in response to increased regulatory scrutiny. Our findings highlight the importance of regulators’ experiences in shaping their monitoring activities and the subsequent effects on regulated entities.


Once Bitten, Twice Shy: Learning From Corporate Fraud and Corporate Governance Spillovers


This paper finds that investors learn from their experience with corporate fraud and financial misconduct and modify their investment behavior to avoid suspicious firms and increase corporate governance efforts. More specifically, mutual funds that experienced corporate fraud at one of their portfolio firms subsequently chose firms with lower probabilities of fraud and financial misconduct, compared to otherwise similar funds that did not experience any corporate malfeasance incidents. Furthermore, mutual funds that experienced corporate fraud intensify their corporate governance activities and vote significantly more against management at other  firms in their portfolios, compared to the voting behavior at the same firms by otherwise similar funds but that did not experience any fraud, especially on issues related to director election, audit, and financial statement. I find that fraud-experienced investors are significantly less likely to vote for problematic directors. Finally, I find that firms held by more fraud-experienced investors observe a significant drop in the propensity to get an accounting fraud sanction in subsequent years. Taken together, my results show that learning and experience play a critical role in corporate governance spillovers, fraud detection, and deterrence.


It is Easy to Be Brave from a Safe Distance: Proximity to the SEC and Insider Trading, with Quoc H. Nguyen

We use hand-collected data from SEC's litigation releases for insider trading violations to examine the effect of geographic distance on its enforcement activities and insider trading activities. First, we find that the SEC is more likely to investigate companies that are closer to its offices. Second, we find that illegal insider trading increases with a company's distance from an SEC office. Lastly, we utilize the closure of SEC offices as exogenous shocks to geographic proximity and find that insider trading at nearby companies increase significantly compared with trading at otherwise similar companies not affected by the closures. Overall, our findings suggest that information asymmetry and resource constraints prevent regulators from monitoring effectively.



Work in Progress

Presidential Casting Behavior and the Predictability of Political Scandals (with Lauren Cohen and Dong Lou). 

The Effect of Social Protests on Judicial Decisions (with Lisa Liu).

Legislators' Personal Experience and Legislative Support (with Alexa Scherf and Aneesh Raghunandan).

Regulatory Disclosure and Environmental Justice (with Grace Fan and Xi Wu).