AQR Top Finance Graduate Award 2022
The difference between corporate bond yields at issuance and in secondary markets, the ``issuance premium'', spikes in bad times, raising firms’ capital costs. Using new bond-level data and high-frequency variation in bond supply and demand, I estimate a model of primary markets with imperfectly elastic investors, endogenous bond supply, and underwriter frictions that quantifies the drivers of issuance premiums. I find underwriters’ favoritism towards investors increases issuance premiums’ levels and cyclical variation. On the other hand, relatively elastic investors allow primary markets to absorb large bond issuances. My findings inform policies targeted at bond issuance markets.
with Olivier Darmouni and Kairong Xiao.
We develop a two-layer asset demand framework to analyze fragility in the corporate bond market. Households allocate wealth to institutions, which allocate funds to specific assets. The framework generates tractable joint dynamics of flows and asset values, featuring amplification and contagion, by combining a flow-performance relationship for fund flows with a logit model of institutional asset demand. The framework can be estimated using micro-data on bond prices, investor holdings, and fund flows, allowing for rich parameter heterogeneity across assets and institutions. We match the model to the March 2020 turmoil and quantify the equilibrium effects of unconventional monetary and liquidity policies on asset prices and institutions.
with Olivier Darmouni.
Appears in COVID Economics. Press coverage: WSJ, VoxEU.
How do asset purchases by central banks transmit to the real economy? Using micro-data on corporate balance sheets, we study firm behavior after the unprecedented policy support to corporate bond markets in 2020. As bond yields fell, firms issued bonds to accumulate large and persistent amounts of liquid assets. The effect on real investment was generally weak: many issuers already had access to bank liquidity and maintained equity payouts, while others used bond funds to pay back bank debt. This evidence sheds light on how corporate liquidity and financial heterogeneity matter for the macro-economy and the transmission of unconventional monetary policy.
with Julia Selgrad. Updated February 2026.
Best Paper in Empirical Finance at WFA, 2026
Best Paper in Corporate Finance Award, SFS Cavalcade North America 2026
We explore how monetary policy affects corporate investment decisions, and why there are long lags in transmission. To do so, we hand-collect a firm-level dataset of U.S. investment plans and link it to managers’ cash-flow expectations. Plans strongly predict realized investment, and allow us to observe decision changes separately from implementation. Using high-frequency monetary policy surprises, we show that firms revise investment plans in response to monetary policy, but the response varies by horizon: long-horizon plans are much more sensitive to policy than near-term plans. Consistent with theories of capital production frictions, plans for new projects respond more to monetary policy than plans related to ongoing projects. These results help to explain the long lags in monetary policy transmission. Regarding transmission mechanisms, we document evidence of a cost of capital channel. Cash flow expectations respond to policy but explain a small fraction of investment-plan adjustments for firms in our sample.
with Jinyuan Zhang. Posted July 2026
Whether economic news affects fiscal policy depends on when it arrives. Using hand-collected budget documents for 47 U.S. states over 1995--2024, we show that enacted state budgets lock in 79 percent of within-state spending variation, and we identify when those budgets incorporate information. Exploiting staggered proposal dates, whereby the same national shock falls inside one state's budget-writing months and outside another state's, we find that news arriving in the five months before a state's proposal date---the ``decision window''---is incorporated into revenue forecasts and spending, while similarly informative news arriving outside the window is not incorporated, and instead predicts forecast errors. Budget timing gates the transmission of economic news to the real economy: decision-window news moves employment in government-dependent industries by four times as much as off-window news, with larger effects for bad news. Monetary policy affects state spending more when it arrives during the state's decision window, suggesting an institutional source of ``long and variable lags.''
with Lira Mota. Updated July 2025.
Best Paper in Corporate Finance Award, SFS Cavalcade North America 2025
Using a newly comprehensive merge between firm-level data and corporate bond issuance and holdings, we demonstrate that firms face a trade-off between minimizing capital costs and diversifying their investor base when selecting bonds to issue. Investor specialization in certain bond types allows firms to effectively shape their bondholder composition through their issuance decisions. Firms with greater diversification in their bondholder composition exhibit increased resilience to credit market shocks. Our analysis reveals that firms time the market when issuing bonds. Market timing serves not only to minimize capital costs but also as a strategy for credit supply diversification. These findings highlight the crucial role of financially sophisticated firms in strategically supplying assets to a market increasingly dependent on non-bank intermediaries.
Data: Map bond issuers to Compustat parent company.
"Corporate Bond Issuance and Bank Lending in the United States" (with Olivier Darmouni), European Economy: Banks, Regulation, and the Real Sector - Banking and Covid, 2021. April 2021. Link.
"Reclassification at Facebook (2016-2017)." (with Wei Jiang), Columbia CaseWorks, Case ID: 180310, Spring 2018. Link.
"Fraunhofer: Innovation in Germany." (with Diego Comin and Gunnar Trumbull), Harvard Business School Case 711-022, March 2011. (Revised March 2012.)
"Fraunhofer: Five Significant Innovations." (with Diego Comin and Gunnar Trumbull), Harvard Business School Supplement 711-058, March 2011.