Research

Publications

"Legal Risk and Information Spillover Through Private Lender Reports" - Journal of Financial Markets (2022) - with Abe de Jong and Chris Veld 

We investigate the effect of legal risk on private information spillover from syndicated loan borrowers to equity markets. We find evidence that is consistent with leakage of information provided to institutional investors in monthly private reports. We expect that insiders avoid the adverse consequences of noise trading by timing trades closely before public announcements. Consistent with this expectation, during a period of low legal risk, we observe abnormal stock returns just before public earnings releases. When legal risk increases, the information leakage decreases. We also find that reputational risk mitigates insider trading after private information releases.

"Plantation Mortgage-Backed Securities: Evidence from Surinam in the 18th Century" - Journal of Economic History (2023)  - with Abe de Jong and Peter Koudijs

In the second half of the 18th century, Dutch bankers channeled investors’ funds to sugar and coffee plantations in the Caribbean, Surinam in particular. Agency problems between plantation owners, bankers, and investors led to an arrangement called negotiaties. Bankers oversaw plantations’ cash-flows and placed mortgage-debt with investors. We demonstrate how this securitization arrangement worked using market-wide data and detailed records from banker F.W. Hudig. During the boom, debt contracts and their securitization were an efficient solution for planters, bankers, and investors. However, the market crashed after an oversupply of credit. This induced inefficient restructuring due to debt overhang. 

Working papers

"Going for Broke: Bank Reputation and the Performance of Opaque Securities" - R&R Journal of Finance - with Abe de Jong and Peter Koudijs

[Best paper in Corporate Finance, AFAANZ annual conference 2023] 

Can banks’ reputational concerns improve the quality of opaque, off-balance sheet securities, such as mortgage-backed securities? We study this question in a uniquely parsimonious setting. In the 1760s, Dutch banking partnerships securitized West-Indian plantation-mortgages that were risky and opaque. High-reputation banks originated better mortgages and issued securities that, on average, retained 17.5 percent more of their value during a market collapse. Reputational effects are attenuated when the managing partners were married into wealth or received a large share of profits in the short-term, suggesting bank reputation only works if bankers are personally exposed to (long-run) reputational losses.