Research Interest

Financial accounting, corporate fraud, government regulation and enforcement, financial disclosure

Working Papers

The Effectiveness of White-Collar Crime Enforcement: Evidence from the War on Terror, 2017 (job market paper) - download

• Additional Analyses
• Appendices

This paper studies the deterrent effect of criminal enforcement on white-collar criminal activities. Using the 9/11 terrorist attacks as a shock to the FBI's allocation of investigative resources and priorities, and variations in the Muslim population in the United States as a measure of geographic variations in the shock, I examine two questions: (1) Does the bureau's shift to counter-terrorism investigations after 9/11 lead to a reduction in the enforcement of laws targeting white-collar crime? (2) Does white-collar crime increase as a result of less oversight? Using a difference-in-differences estimation approach, I find that there is a significantly greater reduction in white-collar criminal cases referred by FBI field offices that shift their investigative focus away from white-collar crime to counter-terrorism. I also find that areas overseen by FBI field offices that shift their attention from white-collar crime to counter-terrorism experience a significantly greater increase in wire fraud, illegal insider trading activities, and fraud within financial institutions.

Once Bitten Twice Shy: Investor Learning From Corporate Fraud, Investment Choice, and Corporate Governance, 2017

This paper finds that investors learn from their experiences with corporate fraud and financial misconduct and modify their behavior accordingly. Mutual funds that experienced corporate fraud at one of their holdings, compared with otherwise similar funds that have experienced no instances of corporate malfeasance, subsequently choose firms where fraud and financial misconduct are less likely to occur. Furthermore, mutual funds that experienced corporate fraud at one of their holdings also intensify their corporate governance activities and vote significantly more frequently against management on issues related to director elections, audits and financial statements at other firms in their holdings, compared with the voting behavior at the same firms of otherwise similar funds but that did not experience fraud. Taken together, my results show that learning and experience play a critical role in corporate governance and fraud detection.

It is Easy to be Brave From a Safe Distance: Proximity to the SEC and Insider Trading, 2017 (with Quoc H. Nguyen) (link to SSRN)

• Under review
• 2015 Northern Finance Association Meeting
• Media mention: Bloomberg

We use hand-collected data from the SEC's litigation releases for insider trading violations to examine the effects of geographic distance on its enforcement activities and insider trading activities. First, we find that the SEC is more likely to investigate companies that are located closer to its offices. Second, we find that illegal insider trading increases with a company's distance from an SEC office. Lastly, we utilize the closure of SEC offices as exogenous shocks to geographic proximity and find that illegal insider trading at nearby companies increases significantly compared with illegal insider trading at otherwise similar companies that are not affected by the closures. Overall, our findings suggest that information asymmetry and resource constraints prevent regulators from monitoring companies effectively.

Work in Progress

Corruption and Foreign Investment

Acquiring Soft Information: Evidence from Travel Logs, (with Quoc H. Nguyen)

Distrust in Finance and the Savings Behavior of African Americans, (with Quoc H. Nguyen)

References