[3] M&As, Employee Costs and Labor Reallocation 

Journal of Finance, Forthcoming

Mergers are associated with large and persistent earnings declines for incumbent employees in target firms. Linking employer-employee administrative data with information on merger activity in Brazil, I find the negative effects are entirely concentrated on employees who exit target firms and reflect displacement in the short run and wage declines in the long run. Low-skilled, managerial, and older employees fare worse. Overall, I conclude that mergers are followed by substantial reallocation costs reflecting losses of firm-specific wage premiums, matching inefficiencies, and industry-specific human capital depreciation with employees transitioning to lower-paying firms considered to be of lower productivity and employment value.

Presentations: Stanford Institute of Theoretical Economics Summer Workshop · CMU-Pitt-PSU Finance Conference · CSEF and RCFS Conference on Finance, Labor and Inequality · CEPR Endless Summer Conference on Financial Intermediation and Corporate Finance

[2] The Labor Effects of Judicial Bias in Bankruptcy 

with Aloisio Araujo, Rafael Ferreira, Flavio Moraes, Jacopo Ponticelli and Margarita Tsoutsoura

Journal of Financial Economics, 150(2), November 2023

We study the effect of judicial bias favoring firm continuation in bankruptcy on the labor market outcomes of employees by exploiting the random assignment of cases across courts in the State of Sao Paulo in Brazil. Employees of firms assigned to courts that favor firm continuation are more likely to stay with their employer, but they earn, on average, lower wages three to five years after bankruptcy. We discuss several potential mechanisms that can rationalize this result, and provide evidence that imperfect information about outside options in the local labor market and adjustment costs associated with job change play an important role.

Presentations (*Coauthors): JADE-CEPR-TIME Conference on Economic Development · Lancaster University Management School · Alliance Manchester Business School · Rutgers Business School · Georgia Tech (Scheller) · Arizona State University (Carey) · Indiana University (Kelley) · Cyprus University of Technology · Corporate Restructuring and Insolvency Online Seminar · AFA Conference · University of British Columbia (Sauder)* · University of Kentucky (Gatton)* · Washington University in St. Louis (Olin)* · Central European University* · London Business School* · City University London* · RIDGE Public Economics Workshop · Red Rock Conference · EFA Conference · FIRS Conference · SFS Cavalcade Conference · CEPR Adam Smith Workshop · Labor and Finance Group Online Seminar · Penn State University (Smeal)* · University of Toronto Finance Conference* · University of Essex* · University of Groningen* · Cornell University (Johnson)* · Northwestern University (Kellogg)* · University of Mannheim* · CMU-Pitt-PSU Finance Conference

[1] Revealing Corruption: Firm and Worker Level Evidence from Brazil 

with Emanuele Colonnelli, Jacopo Ponticelli, Mounu Prem and Margarita Tsoutsoura

Journal of Financial Economics, 143(3), March 2022, 1097-1119

We study how the disclosure of corrupt practices affects the growth of firms involved in illegal interactions with the government using randomized audits of public procurement in Brazil. On average, firms exposed by the anti-corruption program grow larger after the audits, despite experiencing a decrease in procurement contracts. We manually collect new data on the details of thousands of corruption cases, through which we uncover a large heterogeneity in our firm-level effects depending on the degree of involvement in corruption. Using investment-, loan-, and worker- level data, we show that the average exposed firms adapt to the loss of government contracts by changing their investment strategy. They increase capital investment and borrow more to finance such investment, while there is no change in their internal organization. We provide qualitative support to our results by conducting new face-to-face surveys with business owners of government-dependent firms.

Presentations (*Coauthors): CEPR/IGC Conference on Labor Markets in Developing Countries · Joint CEPR Conferences on Incentive, Management and Organization and Entrepreneurship* · CEP/DoM Capabilities Seminars* · Chicago Booth Stigler Center Political Economy Conference* · MFA Conference · IFN Stockholm* · University of Chicago (Booth) · Cornell University (Johnson)*

[4] Women in the Financial Sector 

with Maria-Teresa Marchica, Elena Simintzi and Margarita Tsoutsoura

Revision Requested at the Journal of Finance

We examine the evolution of the gender pay gap in finance, using administrative U.K. data over two decades. We show a persistently larger gender pay gap in finance relative to other sectors, which is predominantly explained by skilled male employees sorting relatively more into finance. The gender pay gap in finance is lower for flexible occupations, in firms providing childcare benefits, and in female-friendly environments. Over time, the difference in the gender pay gap between finance and non-finance sectors has steadily narrowed from 40% in 1997 to 23% in 2019, as more skilled women sort into finance.

Presentations (*Coauthors): Lehigh University (COB)* · AFA Conference* · Chicago Booth Household Finance Conference* · Florida State University (COB)* · McGill University (Desautels)* · MFA Conference · University of Massachusetts, Amherst (Isenberg)* · University of Connecticut* · Northeastern University (D'Amore-McKim)* · University of Oregon (Lundquist)* · Georgia State  (Robinson)* · EFA Conference* · University of Pittsburgh (Katz)* · Corporate Finance Webinar Paris* · Tel Aviv University (Coller)* · University of Calgary (Haskayne)* · Alliance Manchester Business School* · University of Cambridge (Judge)* · Corporate Finance Webinar (Paris)* ·  CUNEF Universidad* · Temple University (Fox)* · University of Edinburgh* · University of Groningen* · University of South Carolina (Moore)* · University of Georgia (Terry)* · National University of Singapore* · University of Toronto (Rotman)* · UNSW* · Columbia University*

[5] Entrepreneurship and the Gig Economy: Evidence from U.S. Tax Returns 

with Matthew Denes and Margarita Tsoutsoura

Revision Requested at the Journal of Financial Economics

• W.E. Upjohn Institute for Employment Research Early Career Research Award

• Ewing Marion Kauffman Foundation Knowledge Challenge Grant

Platform intermediation of goods and services has considerably transformed the U.S. economy. We use administrative data on U.S. tax returns to study the effect of the gig economy on entrepreneurship. We find that gig workers are more likely to become entrepreneurs, particularly those who are lower income, younger, and benefit from flexibility. We track all newly created firms in the economy and show that the gig economy facilitates learning by potential entrepreneurs who experiment with starting riskier firms. Overall, our findings provide novel evidence about how on-the-job learning promotes entrepreneurial entry and shifts the type of firms started by entrepreneurs.

Presentations (*Coauthors): University of Maryland (Smith) · North Carolina State University (Poole)* · University of Michigan (Ross)* · University of Oregon (Lundquist) · Boston College (Carroll)* · University of Oxford (Said)* · Georgia Tech/FRB Household Finance Conference* · FIRS Conference · MFA Conference · Bank of Greece · NBER Entrepreneurship · ECB-CEPR Labour Market Workshop · Finance, Organizations, and Markets (FOM) Conference · NFA Conference · Corporate Finance Day · Red Rock Conference · CEPR Endless Summer Conference on Financial Intermediation and Corporate Finance · WFA Conference · LBS Summer Finance Symposium · Munich Summer Institute · Northeastern University Finance Conference · Labor and Finance Group Conference at WUSTL (Olin) · Craig Holden Memorial Finance Conference · FSU SunTrust Beach Conference · RCFS Winter Conference · U.S. Department of the Treasury Office of Tax Analysis

[6] Corporate Takeovers and Labor Restructuring

Using detailed employer-employee administrative data linked with manually-collected information on merger activity in Brazil, I create input-based measures of technological and organizational changes to examine the relation between firms' human capital composition and mergers. I find that firms with larger shares of high-skilled and innovation-intensive employees participate in mergers. Occupational proximity is an important driver of the transaction incidence. Examining post-merger human capital compositional shifts in target firms, I provide evidence on efficiency-seeking restructuring through technology adoption, investment in innovation and cost synergies. I find support for knowledge transfer, management changes and scale economies as potential mechanisms behind these shifts.

Presentations: SKEMA Corporate Restructuring Conference · ABFER, CEPR and CUHK First Annual Symposium in Financial Economics · Baltimore Area Finance Conference · University of Connecticut (School of Business) · McGill University (Desautels) · Baruch College (Zicklin) · Tilburg University · Cornell University (Johnson) · Southern Methodist University (Cox) · Federal Reserve Board · University of Pittsburgh (Katz) · Ohio State University (Fisher) · University of Kentucky (Gatton) · University of Illinois, Urbana-Champaign (Gies)

[7] Who Benefits from an Increase in Enfranchisement? Evidence from Brazil 

with Rodrigo Schneider and Margarita Tsoutsoura

[Draft Coming Soon]

We use the phased-in introduction of electronic voting in Brazil as an exogenous shock to lower-skilled and lower-income voters' enfranchisement. Using detailed employee-employer administrative data and a difference-in-differences design that exploits a distinct assignment rule in the implementation of electronic voting based on a population threshold, we document that an increase in enfranchisement increases labor earnings of disadvantaged groups. Lower-skilled and lower-income employees experience the greatest benefits. Exploring potential mechanisms, we find that enfranchisement improves outcomes through increases in public sector employment and wages. Finally we find spillover effects to the private sector, potentially driven by the expansion of public services, along with an increase in the probability of becoming entrepreneurs for lower-skilled individuals.

Presentations (*Coauthors): CEPR WEFIDEV Workshop · MFA Conference · Washington University in St. Louis (Olin)* · Labor and Finance Group Conference at Columbia Business School · Skidmore College*

[8] First Come, First Served: The Timing of Government Support and its Impact on Firms 

with Matthew Denes and Margarita Tsoutsoura

• Featured in: 2022 Trends in Entrepreneurship Report

We study the effects of deploying government capital to firms during crises. Using exogenous variation in the timing of disbursements in the Paycheck Protection Program (PPP), we find that firms receiving PPP loans later become more financially distressed and face reductions in credit supply. These effects are amplified for firms with heightened financial constraints. We also show that firms receiving loans later have lower economic activity using in-store activity and shutdowns. The results are consistent with a direct channel on firm operations and a financing channel. Overall, our findings highlight the role of timely and uninterrupted fiscal support during crises.

Presentations (*Coauthors): ECGI Corporations and Covid-19 Conference · FMA Conference* · University of British Columbia (Sauder)* · Cornell University (Johnson)* · Carnegie Mellon University (Tepper)* · ICEA Public Policy Lessons Conference

[9] Family Control and the Cost of Debt: Evidence from the Great Recession 

with Margarita Tsoutsoura

The purpose of the paper is to examine the effect of founding-family control on the cost of bank debt. We examine the cost of accessing the syndicated market, and we use the financial crisis and the unexpected nature of Lehman Brother's collapse as a laboratory in order to tease out the effect of family ownership. We find the increase in loan spreads around the Lehman crisis was at least 24 basis points lower for family firms. Furthermore, the gap in spreads among family and non-family firms becomes wider among firms that had pre-crisis relationships with lenders with higher exposure to the shock. The evidence is consistent with family ownership lowering the cost of accessing debt financing, especially when lenders are constrained. We further investigate potential channels that drive the effect of family ownership. We provide novel evidence that for 17% of the family firms, creditors impose explicit restrictions in private credit agreements that require the founding family to maintain a minimum percentage of ownership or voting power. Thus, creditors value the presence of the family. Furthermore, the impact of family control on lowering the cost of bank debt is higher when family CEOs run the firms and among firms with higher ex-ante agency conflicts.

Presentations (*Coauthors): CMU-Pitt-PSU Finance Conference · EFA Conference · WFA Conference · Harvard Business School* · Sixth UNC/Duke Corporate Finance Conference · OSU Corporate Finance Conference · The CERP Second European Workshop on Entrepreneurship Economics · University of Chicago (Booth) · University of Illinois, Urbana-Champaign (Gies)

[10] The Bank Lending Channel and Corporate Innovation 

[Draft Coming Soon]

Presentations: Third CERP European Workshop on Entrepreneurship Economics · Seventh USPTO/Searle Center Conference on Innovation Economics · Third World Bank/Bank of Spain Academic Conference in Financing Growth · Bank Of Finland and CEPR Entrepreneurial Finance, Innovation and Growth Conference · Australasian Finance and Banking PhD Forum · University of Illinois, Urbana-Champaign (Gies)