JOB MARKET PAPER 

Real Effects of Personal Liability: Evidence from Industrial Pollution [SSRN]

Rotman TDMDAL Roundtable (2024), CSFN Conference (2024), Adam Smith ESG Conference (2024), HEC Paris Denis Gromb Workshop (2024), NFA (2024), Rotman Finance (2024), CLEA Conference (2024), Rotman Sustainability brownbag (2024), ASU Sonoran Winter Conference (2025)

Abstract: This paper studies how imposing personal liability on directors and executives can mitigate corporate environmental externalities. I use a landmark court case that increased perceptions of out-of-pocket liability risk related to corporate releases of toxic chemicals. This change varied across Canadian provinces based on their legal systems, which I exploit in a difference-in-differences analysis. I find that imposing personal liability leads to a 23% reduction in toxic chemical releases. Treated small firms scale down operations while large firms invest in clean technology. This environmental benefit is accompanied by a 2.6% decrease in abnormal returns following the shock, as well as an increase in director turnover, particularly among the wealthiest directors and environmental experts who are the most exposed to liability risk. These findings contribute to the debate on the optimal level of personal liability to regulate corporate externalities.

WORKING PAPER 

ESG Investing and Managerial Incentives  

with Nicolas Inostroza

Theory Reading Group Rotman (2022), Rotman Finance (2022), MFA (2023), FIRS (2023), RBC x Rotman Sustainable Finance Research Roundtable (2023), Queen's Corporate Finance Theory Workshop (2024)

Abstract: This paper examines how investors, particularly those with strong sustainability preferences, can influence firms' sustainability choices through capital investment. We propose an agency model where the CEO of a firm chooses sustainability investments, while investors have heterogeneous sustainability preferences and rely on imperfect information (e.g., ESG score) to allocate capital. We show that the CEO's incentives are determined by the sensitivity of the stock price to ESG scores. Greater precision in ESG ratings—potentially arising from disagreement among raters—strengthens the CEO's incentives but can lead to over-investment in sustainability. Additionally, greater dispersion in investors' sustainability preferences weakens the CEO's incentives, regardless of the precision of the ESG score. These findings help explain why corporations continue to underinvest in sustainability and contribute to the debate on how ESG information should be disclosed to financial markets. 

WORK IN PROGRESS

The Impact of Paternity Leave on the Intra-Household Gender Gap

Abstract: This paper studies how paternity leave affects economic disparities between spouses. Relative to maternity or parental leave, paternity leave is a less common policy, partly because it focuses exclusively on fathers and there is doubt about take-up and impact. However, policymakers are increasingly interested in expanding this type of leave. I exploit the introduction of paternity leave in the Province of Quebec (Canada), which is non-transferable to mothers. Fathers became eligible for this leave if their child was born after January 1, 2006, which I use in a regression discontinuity design analysis. Using tax-filing data from Statistics Canada, I investigate how paternity leave affects the economic gap between spouses in terms of career outcomes, such as earnings, job mobility, career paths, the type of firms they work for. I will also examine its impact on family outcomes, such as the rates of divorce and fertility. Finally, I will examine how paternity leave impacts the performance of the firms where mothers and fathers are employed. The findings will deepen our understanding of how gender-specific family policies affect intra-household gender gap.