Research

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. 

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 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 are 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.

Punishing Firms for Their Managers' Misreporting, with Alfred Wagenhofer (July 2025). 

Under 2nd round review at Review of Accounting Studies

Abstract: Securities regulators, such as the U.S. Securities and Exchange Commission (SEC), frequently punish firms for their managers' misreporting. Their argument is that doing so would enhance firms' long-term value by mitigating underinvestment in compliance mechanisms, such as internal controls over financial reporting (ICs). Opponents of corporate penalties argue that they would harm the very same investors who were already harmed by misreporting. We evaluate these arguments in a model with a capital market-oriented manager who can engage in misreporting and with a board of directors that oversees financial reporting by investing in IC quality. We identify governance transparency and board dependence as key factors that codetermine the merits of corporate penalties. Underinvestment in ICs only obtains if the board's choice of IC quality is opaque and if it suffers from a severe dependence issue. Then corporate penalties can be beneficial as they induce higher investment in ICs. However, they improve firm values only if the alleviation of IC underinvestment outweighs the direct effect of imposing penalties on firms, which likely holds for opaque, poorly governed, small, and less complex firms. These results should inform securities regulation and empirical studies of the firm value effects of public enforcement.

Investor Communication to Elicit Corporate Disclosure, with Evgeny Petrov (August 2025).

Link to prior working paper: Conversations Between Managers and Investors

Abstract: We develop a model in which a prospective equity investor strategically communicates private information to influence a manager's disclosure policy before providing financing. While investor communication is costless, corporate disclosure leads to firm-accruing proprietary costs. In her communication strategy, the investor trades off the marginal expected efficiency improvement with the expected increase in the proprietary costs associated with corporate disclosure. The investor's equilibrium communication strategy is consistent with the notion of investor skepticism eliciting corporate disclosure. The frequency of investor skepticism further first increases and then decreases with the proprietary costs of disclosure. Additional results suggest that investor communication is overall beneficial, as it facilitates capital formation and improves expected firm values, and that it is most beneficial in cases with intermediate proprietary costs (i.e., industries with intermediate competition). Our results provide a basis for novel predictions for the empirical study of investor-manager interactions.

Economic Effects of Sustainability Reporting Regulation in the Presence of Social Activism, with Martin Klösch (August 2025). 

Abstract: We develop a model with a strategic social activist with an impact objective, a capital market-oriented manager, and risk-neutral investors in a perfectly competitive capital market. The activist publicly exerts an effort to lobby for regulations that would lead to firms internalizing the social costs of their environmental and social impacts, and thus give rise to transition risks. The manager strategically invests in abatement activities and can engage in greenwashing if abatement proves unsuccessful. We find that more stringent sustainability reporting regulation leads to higher investments in corporate abatement activities and more social activism. The complementarity between corporate abatement investments and social activism induces a disproportionately higher value relevance of sustainability reporting, which strengthens managerial greenwashing incentives and counters the deterrence effect of such regulations. In equilibrium, greenwashing first increases and then decreases with the stringency of sustainability reporting regulations. In addition, we identify conditions under which lax instead of stringent sustainability reporting regulation is socially optimal. 

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

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.