Research

Refereed Publications

"Can Central Banks Boost Corporate Investment: Evidence from the ECB Liquidity Injections?” with M. G. Subrahmanyam (NYU Stern), D. Y. Tang (HKU), and S. Q. Wang (WBS), The Review of Corporate Finance Studies ( May 2023), Vol. 12, Issue 2, Pages 402-442

Liquidity injections by central banks have become frequent and massive, but their real effects on corporate investment remain unclear. We examine the longer-term refinancing operations (LTROs) of the European Central Bank (ECB) during the eurozone sovereign crisis and show that greater LTRO funding to banks is associated with lower corporate investment. Riskier banks received funds through the LTROs and subsequently increased their holdings of risky sovereign debt. Corporate investment reductions are associated with these banks. Further, concurrent fiscal and regulatory policies impeded the effectiveness of the ECB liquidity injections. Our findings identify the contributing factors for these failures of monetary policy.

"The Value of Bond Underwriter Relationships" with J. Dick-Nielsen (CBS) and M. Stenbo Nielsen (CBS)),  Journal of Corporate Finance (June 2021), Vol. 68

We show that corporate bond issuers benefit from utilizing existing underwriter relationships when rolling over bonds, but at the same time become exposed to underwriter distress. A strong relationship enables the underwriter to credibly certify the issuer resulting in lower direct issuance costs and lower underpricing. However, if the underwriter becomes distressed, this spills over to the issuer's credit risk, because it weakens the relationship and increases the risk of involuntary relationship termination. The credit risk spillover is more pronounced for risky, information-sensitive issuers with high rollover exposure, i.e., those issuers mot in need of certification by an underwriter. 

Working Papers

"Is Financial Regulation Costly for Banks? Evidence from Countercyclical Capital Buffers"

Work in Progress

"The Effects of Bank Competition on Lending to Firms" joint with Simcha Barkai, Kaveh Majlesi and Maryam Farboodi 

"Macroprudential Policy and Corporate Investment'' joint with Steven Ongena

Policy Work 

"The Effect of Media Sentiment on Stock Market Performance" joint with Anna K. Hvid, Alessandro Martinello and Rastin Matin, Danmarks Nationalbank Working Paper (2019), No. 141

The sentiment of news predicts the short-term stock market performance of individual companies. We find that this association is solely due to the idiosyncratic informational content of an article. We transparently quantify the association between news sentiment and stock market performance of S&P 500 companies, using articles written by Reuters between 2000 and 2018. First, we isolate the effect of sentiment independently of idiosyncratic informational content by exploiting a topicbased shift-share instrument. Second, we show that exogenous variation in article sentiment isolated through our topic-based shiftshare instrument, while strongly related to article sentiment, is unrelated to abnormal returns in the stock market.