Working Papers

1. Artificial Intelligence and Debt Collection: Evidence from a Field Experiment R&R at RFS

- Presented at: WAPFIN@Stern 2022, NBER SI 2023, NFA 2023, WFA 2025

ABSTRACT: This paper examines the role of artificial intelligence (AI) in facilitating the non-judicial collection process of delinquent consumer debt. Leveraging a randomized field experiment in the Netherlands, we show that algorithmic calling decisions achieve 23.4% higher repayment rates compared with human collection officers. Uncovering the black box of AI, we find that it extracts predictive signals from unstructured notes compiled by collectors. These signals not only predict whether the delinquent borrowers would repay during the non-judicial collection process, but also shed light on the underlying motivations or impediments of delinquent borrowers' repayment behavior.

2. Data Specialists and Market Efficiency (with Massimo Massa and Hong Zhang) R&R at RFS

- Presented at: EFA 2022

ABSTRACT: In the age of big data, investors need to process increasingly complicated, multidimensional data to decipher different aspects of a firm. How do investors deal with such multidimensional data? We find more informed institutional investors tend to specialize in subsets of firm aspects (i.e., data specialists). Such data specialization, however, may hamper market efficiency. Inattention shocks to specialists hinder price efficiency in their specialized aspects of firms; other aspects of firms may also be negatively influenced due to strategic complementarity. Specialist inattention also significantly impacts anomaly returns, impeding the price corrective effect of news arrival.

3. Delegated Leverage and Asset Prices: Evidence from the Hedge Fund Industry  (with Charles Cao, Grant Farnsworth, and Hong Zhang)

- Presented at: HF Research Conference 2023, CICF 2024, FSU Truist Bench Conference 2025

ABSTRACT: Contrary to the conventional wisdom that less constrained investors make superior investments, existing studies find little evidence that the use of leverage improves hedge fund performance. To reconcile this puzzle, we extend Berk and Green’s (2004) model and empirically verify that: 1) Hedge funds reap leverage-based economic rents via fees; 2) Adverse conditions prompt funds to simultaneously reduce leverage and increase holding betas; and 3) A hedge fund leverage tightness factor predicts asset returns, especially during periods with reduced hedge fund leverage. Our results indicate a leverage-based rationale for hedge fund operations with significant asset pricing implications.

4. To Fire or Not to Fire? The Role of Job Security in Asset Management

ABSTRACT: Does job security affect employees’ incentives and performance, and if so, in which direction? I study the causal effect of job security in the setting of asset management and exploit a novel quasi-natural experiment: When an asset management firm’s external subcontractor is involved in regulatory misconduct, the firm increases its reliance on its internal funds and becomes less likely to terminate its internal fund managers, resulting in exogenously increased job security for fund managers inside the firm. Using a difference-in-differences approach, I find that fund managers experiencing increased job security deliver lower performance, especially those who care less about their reputation in the labor market. Furthermore, I show that the firm provides higher pay-for-performance as an imperfect substitute to incentivize employees when internal job security exogenously increases. Overall, my results suggest that higher job security disincentivizes employees and can negatively affect productivity.

5. Does the Market Have a Better Memory Than CEOs? Evidence from M&As (with Massimo Massa)

ABSTRACT: We study whether financial markets are more efficient in terms of memory than corporations. We focus on the market for corporate control and argue that CEOs overlook information about new industries they enter when such news coincides with releases from their primary competitors. In contrast, financial markets are less distracted on average, as they aggregate information from many participants, each with a different attention focus, resulting in less bias overall. Empirically, we document that the likelihood of deals increases with the extent to which the CEOs ignore bad news due to distraction, and such deals tend to be value-destroying, as evidenced by lower future profitability (ROA or ROI). On the other hand, markets immediately price in CEOs' faulty memory, leading to both short-term and long-term negative stock returns. This market reaction is particularly pronounced in firms with more transparent information environments.

6. Strategic Complementarities in Monitoring: The Bright Side of Benchmarking

- Award: 30th AFBC PhD Forum Best Paper First Prize

ABSTRACT: In the mutual fund industry, investment styles act as benchmarks: each fund is required to invest in accordance to its style and their performance is benchmarked against other same-style funds. This paper examines how benchmarking affects the interactions between same-style funds in their monitoring decisions regarding portfolio companies. By scrutinizing the actual voting behavior of mutual funds and exploiting exogenous fire sales and purchases as instruments, I find that incentives of an individual fund to monitor a portfolio company increase with the presence of other same-style funds as shareholders in the company and increase with the holdings of other same-style funds. The results support the existence of strategic complementarities among same-style funds in monitoring. Consequently, companies that are subject to higher strategic complementarities among same-style funds receive more monitoring and make better M&A decisions. Overall, my findings shed light on a bright side of benchmarking—belonging to a same style can act as a coordination device and help mutual funds overcome the free-rider problem, contributing to governance in their portfolio companies.