Research

Selected working papers

Predatory Advertising, Financial Fraud, and Leverage (with Shantanu Banerjee, Sudipto Dasgupta, and Rui Shi)

• UNSW, University of Amsterdam, Shanghai Advanced Insititute of Finance, Bristol University ...

• Abstract: We examine how an industry leader’s competitors respond when financial fraud by the leader is publicly revealed. We document evidence of predatory advertising and pricing. Close competitors of the leader step up advertisement spending relative to control firms. Although we do not directly observe product prices, we find that even though advertisement increases, competitors’ profit margins drop, consistent with predatory pricing. Evidence of predation is stronger when rival firms have larger market share, the fraud firm has higher leverage, and when the average leverage of rival firms is lower. The effects appear mainly in industries that produce customized products and where consumer switching costs are high. Increasing advertising expenditure appears to be a more potent predatory strategy in industries that experience new customer growth, whereas cutting prices appears more potent in industries with stagnant customer base. We present a switching cost model similar to Klemperer (1995) that generates implications broadly consistent with these observations.

Corporate Green Revenue and Syndicated Loan Pricing (with Junyang Yin)

• AAA 2024

• Abstract: How do banks contribute to the green economy? Using a unique dataset detailing firms’ revenue exposure to green business activities, we present new evidence that banks demand lower spreads on syndicated loans to firms generating revenues from green products and services. We find evidence consistent with a causal relation by exploiting mandatory ESG disclosure regulations as plausibly exogenous shocks. We find that the green-revenue effects on loan spreads are attributable to firms’ prospects tied to climate change-related opportunities and banks’ environmental orientations. Moreover, we find suggestive evidence that firms with green revenues tend to file more green patents following loan originations. Interestingly, while banks typically perceive green innovations as riskier and demand higher loan spreads, this effect is offset if a firm also generates green revenues. Collectively, our results highlight the pivotal role that banks play in channeling financial resources towards green business practices.

Other Publications

• COVID-19 and The Corporate Sector: Winners, Losers, and What Lies Ahead (with Sudipto Dasgupta, Subrata Sarkar, and Jayati Sarkar) 

  • Book Chapter in The Impact of COVID-19 on India and the Global Order, Springer Nature, 2022.

• NAV inflation and impact on performance in China (with Mark Shackleton and Chelsea Yao), 2020, European Financial Management, 26 (1),  118-142.

  • Combined from Jiali's Master of Research Dissertation