Research

When Do Corporate Penalties for Financial Misreporting Enhance Long-Term Firm Value? with Alfred Wagenhofer (2025), Review of Accounting Studies (forthcoming).  Available on SSRN here. Note: This paper was previously circulated under the title "Punishing Firms for Their Managers' Misreporting." 

In a nutshell: The firm-value effects of corporate penalties aimed at improve the compliance infrastructure within firms are moderated by governance transparency and board dependence. This has the implication that the threat of these penalties only enhances long-term firm value for 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. 

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.

Investor Communication to Elicit Corporate Disclosure, with Evgeny Petrov (October 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 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 idea that investor skepticism elicits corporate disclosure and that investor communication on average elicits disclosure. Additional results suggest that investor communication is overall beneficial as it facilitates capital formation and improves expected firm values, and that it is further most beneficial in cases with intermediate proprietary costs. Our results provide a basis for novel predictions for the empirical study of investor-manager interactions.

Economic Effects of Sustainability Reporting Regulation When Social Activism Amplifies Transition Risks, with Martin Klösch (October 2025). 

Abstract: We study the consequences of social activism on various environmental and social (E&S) issues (e.g., climate change, biodiversity loss) for the economic effects of sustainability reporting regulations. Our model features a strategic impact-oriented social activist advocating for E&S regulations amplifying corporate transition risks, a capital market-oriented manager engaging in abatement activities and greenwashing, and financially oriented investors in a perfectly competitive capital market. More stringent sustainability reporting regulation induces corporate abatement, but also exacerbates social activism, giving rise to a strategic complementarity. This complementarity disproportionately increases the value relevance of sustainability reporting and consequently strengthens managerial greenwashing incentives, countering the direct deterrence effect of sustainability reporting regulation. In equilibrium, greenwashing first increases and then decreases with the stringency of sustainability reporting regulations. In addition, we derive conditions under which lax rather than stringent sustainability reporting regulation is socially optimal. Our results give rise to novel empirical predictions and have important regulatory implications.

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

Litigation Rights in Financial Markets: Information Processing, Informed Trading, and Financial Misreporting, (September 2024).

Abstract How do litigation rights affect investors' incentives to process and trade on public financial information? I study the effects of litigation rights in a variant of a Kyle (1985) model in which a myopic manager misreports her private information and in which a speculator processes and trades on the financial report. I show that the insurance effect of litigation rights reinforces the incentives of the speculator to process and trade on financial information. This in turn increases the value relevance of financial reporting, exacerbating the manager's misreporting incentives and countering the deterrence effect of litigation rights. Under certain conditions, financial misreporting first decreases and then increases in the strength of litigation rights, i.e., a U-shaped relationship. The results give rise to novel empirical predictions on the effects of litigation rights in financial markets.