Research

When Do Corporate Penalties for Financial Misreporting Enhance Long-Term Firm Value? with Alfred Wagenhofer (2026), Review of Accounting Studies 31(1): 118-166.  Available on SSRN here. 

In a nutshell: Corporate penalties aimed at improving the firms' compliance infrastructure (e.g., internal controls) are moderated by governance transparency and board dependence with the implication that such penalties only enhance the long-term value of opaque, poorly governed, small and less complex firms.

Economic Effects of Litigation Risk on Corporate Disclosure and Innovation, with Alfred Wagenhofer (2024), Review of Accounting Studies 29(4): 3328-3368.  Available on SSRN here.

In a nutshell: Both corporate disclosure and innovation can increase or decrease in litigation risk, due to a tradeoff between a direct deterrence effect a la Becker (1968) and an indirect insurance effect a la Arrow (1965), where the latter arises from investors anticipating the legal protection that is afforded to them by litigation rights in their pricing of the firm. 

Optimal Internal Control Regulation: Standards, Penalties, and Leniency in Enforcement, with Alfred Wagenhofer (2021), Journal of Accounting and Public Policy 40(3), 106803. Available on SSRN here.

In a nutshell: It is optimal for regulators to commit to punishing firms for internal control weaknesses only if such weaknesses enabled misreporting.

Deterrence of Financial Misreporting When Public and Private Enforcement Strategically Interact, with Alfred Wagenhofer (2020), Journal of Accounting and Economics 70(1), 101311.  Available on SSRN here.

In a nutshell: Public and private enforcement must not always be complements but can sometimes be substitutes  in misreporting deterrence, and they are more likely substitutes in markets with strong private litigation rights.

Financial Reporting and Credit Ratings: On the Effects of Competition in the Rating Industry and Rating Agencies’ Gatekeeper Role, with Kyungha (Kari) Lee (2019), Journal of Accounting Research 57(2), 545-600. Available on SSRN here; Invited presentation at the 2018 Journal of Accounting Research Conference (link to the webcast of my presentation here). 

In a nutshell: The well-documented positive relationship between issuers' reporting and credit ratings can be explained by a combination of cost of capital effects and strategic rent extraction by credit rating agencies instead of the common inference that rating agencies would be misled by misreporting. 

Analyst Information Acquisition and the Relative Informativeness of Analyst Forecasts and Managed Earnings, (2018). Accounting and Business Research 48(1), 62-76. 

In a nutshell:  The mixed evidence on financial analysts' interpretation versus information roles in capital markets can be explained by the uncertainty that arises from the financial reporting process.

Private Litigation in Financial Markets: Information Processing, Informed Trading, and Financial Misreporting, (February 2026).

In a nutshell: Litigation rights have a trading effect that increases the value relevance of financial reporting and can exacerbate financial misreporting. In addition, litigation rights can be detrimental to market efficiency.

Abstract: In this paper, I study the effects of private litigation in a model featuring a myopic manager who can misreport private information, a speculator who processes the financial report and trades on the acquired information, and a market maker who competitively prices the firm. Private litigation rights reinforce the incentives for the speculator to process and trade on financial information. This in turn increases the value relevance of financial reporting and exacerbates the manager's misreporting incentives, countering the deterrence effect arising from reputational costs of litigation. I show that private litigation exacerbates (deters) misreporting and further increases (decreases) the absolute trading volume around earnings announcements and litigation insurance premiums if the reputational costs are low (high). In addition, I identify conditions under which market efficiency can decrease with private litigation. These results provide a basis for novel empirical predictions and have important regulatory implications.

Investor Communication to Elicit Managerial Disclosure, with Evgeny Petrov (January 2026).

Note: This paper is based on but is qualitatively different from an earlier working paper circulated under the title "Conversations Between Managers and Investors."

In a nutshell: Investors communicate information to managers in order to shape disclosure decisions, trading off the value of disclosure for their own decision making efficiency with the proprietary costs of disclosure. 

Abstract: Anecdotal and systematic evidence suggests that investors and managers exchange information during personal interactions and that these interactions facilitate disclosure. We develop a theory of manager-investor interactions. In our model, a prospective equity investor strategically communicates private information to shape the manager's costly disclosure decision before making an investment decision. For sufficiently small proprietary costs, a unique equilibrium with informative investor communication obtains and exhibits three main features: (i) Unfavorable investor communication elicits disclosure, while favorable communication discourages it; (ii) on average, investor communication increases the likelihood of disclosure and facilitates capital formation, benefiting both the manager and the investor; (iii) unfavorable investor communication as well as the incremental effects of investor communication on disclosure and investment first increase and then decrease with the proprietary costs of disclosure. Our model reconciles well with several empirical regularities, and our results give rise to novel predictions for the empirical study of manager-investor interactions.

Economic Effects of Sustainability Reporting Regulation When Social Activism Amplifies Transition Risks, with Martin Klösch (January 2026). 

In a nutshell: Social activism amplifies transition risks and thus the value relevance of sustainability reporting with the consequence that strengthening lax sustainability reporting regulation exacerbates managerial greenwashing incentives. 

Abstract: We study the economic effects of corporate sustainability reporting regulations in a model with a capital market-oriented manager who invests in abatement activities and obfuscates adverse E&S impacts (greenwashing), financially oriented investors, and an impact-oriented social activist who advocates for future E&S regulations and, thus, amplifies corporate transition risks. More stringent reporting regulation induces corporate abatement and also intensifies social activism, creating a powerful strategic complementarity that disproportionately increases the value relevance of sustainability reporting. This then strengthens managerial greenwashing incentives and counters the deterrence effect of reporting regulations. In equilibrium, we show that greenwashing first increases and then decreases with the stringency of sustainability reporting regulations. In addition, we establish that lax rather than stringent regulation can be socially optimal under certain conditions. Our results give rise to novel empirical predictions and have important regulatory implications. 

Shareholder Activism Based on Financial and Governance Information, (September 2025).

In a nutshell: Activist shareholders target intermediately performing firms as such firms exhibit both a sufficiently good economic substance and a sufficiently high likelihood of a governance issue. Improving governance transparency can further weaken the disciplinary effect of shareholder activism.

Abstract: Are active investors more likely to target poorly or well performing firms? Prior empirical and theoretical studies provide mixed answers. I study an activist's intervention target selection in a setting in which firms' governance quality arises endogenously. In this setting, prior financial performance is informative not only about future cash flows but also about governance quality. Trading off the two inferences, the activist targets intermediately performing firms, implying a nonmonotonic performance-activism relation. The average prior target firm performance can further be positive or negative depending on the activist's intervention costs. In addition, I study improvements in the governance information environment resulting either from mandating more governance-related corporate disclosures or from the availability of commercial governance ratings by third-party providers. Improving governance transparency can weaken the disciplinary effect of shareholder activism on firms' internal governance with detrimental effects for shareholder value.