Accepted/Published Papers

Impact of Regulation on Firm Value: Evidence from the 2016 U.S. Presidential Election
accepted at the Journal of Financial and Quantitative Analysis
Abstract: Using the 2016 US presidential election result as a shock to the expectations about the future regulatory environment, I find that most regulated firms earned approximately 4% higher cumulative abnormal stock returns than least regulated firms during the first 10 trading days after the election. Exploring economic mechanisms, I find evidence consistent with the explanation that more regulations disproportionately harm high-growth firms and allow incumbent firms to extract rents through lower competition and political favoritism. Stock returns are also followed by a shift in firm fundamentals over the three years after 2016, consistent with the economic mechanisms. 

Working Papers

Internal Carbon Markets 

Presented at the AFA PhD Poster Session (2024, Scheduled), Conference on Climate & Energy Finance (2023), NFA (2023), Corporate Finance Days (2023), ESF PhD Workshop (2023), FMA Europe (2022), GRASFI (2022), DGF (2022)

Abstract: I document the existence of a novel market for internal resource reallocation within firms, namely, internal carbon markets. Firms that are part of the European Union Emissions Trading System reallocate carbon allowances between subsidiaries. They reallocate more carbon allowances from subsidiaries with generous free allowances to those with modest free allowances allocated by the regulator. In response to a policy change that restricts the supply of free allowances, subsidiaries of firms with internal carbon markets emit more carbon. The increase in carbon emissions is consistent with an undervaluation of these allowances relative to the market when carbon allowances are transferred internally. Overall, the paper highlights a novel mechanism that can limit the effectiveness of market--based climate policies.

Angels and Demons: The Negative Effect of Employees' Angel Investments on Corporate Innovation (with Clemens Mueller)

Presented at the EFA (2022), NFA PhD Symposium (2021), AOM (2021), EFMA (2021), AFFI (2021), WEFI (2021), Eastern FA (2021), FMCG Conference (2021), RISE3 Workshop (2020)

Abstract: We link data on angel investors in the US to their employment history and show that employers’ innovation output decreases when their employees personally invest in start-ups. Our evidence is consistent with agency conflicts as the reason for lower innovation output. Angel investors divert time and effort from their employer to their personal investments. The effects are more pronounced when angel investments offer stronger financial incentives. In contrast, start-ups benefit from financing by angel investors employed at public firms. We highlight a trade-off between the benefits of angel investors for start-ups and the costs for their employer.

Institutional Investors and Carbon Emissions: Evidence from Emissions Recalibrations of the US EPA (with Stefan Ruenzi)

Presented at the CSR and the Economy (2023, Scheduled), DGF (2021), GRASFI (2021), 4th Shanghai Green Finance Conference

Abstract: We find that institutional investors decrease their holdings in firms that mandatorily report high emissions. To address causality concerns, we use a novel identification strategy based on differences between mandatorily reported carbon emissions (based upon outdated conversion factors for different greenhouse gases) and actual carbon emissions (based upon conversion factors reflecting the updated scientific consensus) for the same firm when they report for the first time. The decrease in ownership is less pronounced for firms that have greater capability to become green and in firms where investors can have a 'voice'. Additionally, firms that experience decreases in ownership from institutional investors reduce their emissions in the longer run.

Exporting Carbon Emissions? Evidence from Space (with Stefan Ruenzi) 

Project supported by INQUIRE Europe 

Abstract: Emission trading systems are an important policy tool to reduce carbon emissions and fight climate change. However, the local nature of all existing ETSs gives rise to the possibility of carbon leakage, i.e., that firms emit more in regions not subject to an ETS to save costs. We use satellite-based production facility location data and provide evidence that firms from the cement and steel industry (which are responsible for more than a third of all industrial $CO_2$ emissions) with production facilities within the EU shift emissions to countries not affected by the EU ETS by emitting more in their non-EU facilities and by acquiring new facilities outside the EU. Emissions are more likely to be shifted to pollution havens.

Work in Progress

Public Participation and Pollution Control (with Stefan Ruenzi)