Working papers
Collateral Values and Global Production Networks, [Job Market Paper]
Presentations: 2nd Durham Conference for Finance Job Market Papers, European Winter Finance Conference 2024, AFA 2024 Poster Session, Asia-Pacific Corporate Finance Online Workshop (ACFOW), the 2023 Baltic Economic Conference, the 2023 HKUST PhD Conference, and the HKUST Finance Brownbag
Abstract
Firms are interconnected through global production networks. In this study, I investigate how changes in a firm’s collateral value affect its supply chain linkages with international trade partners. I use a plausibly exogenous shock to the real estate market in China, which reduced the value of firms’ real estate holdings, and find an 11.1% reduction in exports to trade partners in the US. Financially constrained firms affected by the shock respond by increasing product prices, potentially compromising long-term customer relationships. Connected U.S. customers reallocate their imports to alternative suppliers, thereby inducing a shift to the global production network structure. My findings highlight the role of collateral value in transmitting shocks along the supply chain. Fluctuations in the value of collateral interacting with financial frictions, drive adjustments in trade partnerships.
Smokestacks and the Swamp, with Emilio Bisetti, Stefan Lewellen and Arkodipta Sarkar
Revise and Resubmit, Review of Financial Studies
Best Paper Award (CAF Summer Research Conference, Indian School of Business 2022)
Presentations: the 2023 FIRS conference, the 2022 University of Washington Summer Finance Conference, the 2022 ISB Summer Research Conference, the 2022 CICF, the 2022 ABFER Annual Conference, the 2022 MFA Meetings, the 2022 Finance Down Under Conference, Florida State University, the University of Mannheim, the University of Bonn, 2nd London POLFIN Workshop, the 2021 CFEA Meetings, the 2021 Paris December Finance Meetings, the 2021 Transatlantic Doctoral Conference, the Penn State Energy & Environmental Economics Workshop, the Penn State Finance Advisory Board, the Singapore Scholars Symposium, and more
Abstract
We examine the causal effect of politicians' partisan ideologies on firms' industrial pollution decisions. Using a regression discontinuity design involving close U.S. congressional elections, we show that plants increase pollution and invest less in abatement following close Republican wins. We also find evidence of reallocation: firms shift emissions away from areas represented by Democrats. However, costs rise and M/B ratios decline for firms whose representation becomes more Democratic, suggesting that politicians' ideological demands can be privately costly. Pollution-related illnesses spike around plants in Republican districts, suggesting that firms' pass-through of politicians' ideologies can have real consequences for local communities.