PUBLICATIONS
Zombie Stocks, Harvard Business Law Review, Vol. 14, pp. 185-233, 2024. (with Joseph E. Engelberg, Frank Partnoy, Adam V. Reed, and Matthew C. Ringgenberg)
o Best Paper Award, Securities Law and Finance, American Law and Economics Conference 2023
Abstract: We examine a previously unstudied aspect of short selling: the risk that the shares a short seller has borrowed will be delisted and deregistered. We label such shares “zombie stocks” or “zombies,” because they appear to be “dead,” but nevertheless create financial horror for short sellers, exposing them to significant risks and costs even when the short seller has speculated correctly against a company’s shares. The central problem occurs when short sellers are unable to purchase shares to satisfy their borrowing obligations and instead become stuck paying equity loan fees and posting collateral, potentially indefinitely.
We argue that these risks and costs are a significant limit to arbitrage that impedes the ability and willingness of short sellers to correct stock mispricing. We explain for the first time in the literature how the existing legal framework gives rise to these costs because of the way shares are held, loaned, and traded in public markets.
We also collect and analyze a unique dataset of thousands of stocks that were delisted from 2002–2019, and we examine the risks and costs of stocks becoming zombies. We demonstrate that these risks and costs are substantial: for more than 250 firms in our sample, we show that short sellers could have been trapped in a position for at least a month, and possibly much longer. We quantify the cost of equity loan fees and collateral requirements, which can be substantial.
Finally, we propose and assess several policies to address the existence of “zombie stocks.” We contribute to the law and finance literature by providing the first evidence of zombie stocks as a barrier to short selling and by providing policy responses that could reduce the risks and costs associated with zombie stocks.
When Portfolios Speak: Identity Signaling in Congressional Trading, Finance Research Letters, Vol 98, pp. 109772, 2026. (With Xiang Gao)
Abstract: We investigate whether legislators use equity trading as a form of political expression. Using comprehensive congressional transaction data, we document a robust gender-based asymmetry: male legislators allocate significantly more capital to firms with greater female board representation, whereas female legislators exhibit no comparable pattern. Exploiting California Senate Bill 826 and geographic variation in the local supply of female directors as sources of exogenous variation in board gender composition, we identify a causal effect on legislators’ investment activity. The evidence supports a signaling mechanism: male legislators—especially Democrats, those facing imminent elections, and those representing female-majority constituencies—use observable portfolio choices to signal support for gender diversity, rather than trading on superior firm performance or lower risk associated with gender-diverse boards. Overall, our findings suggest that for U.S. legislators, the stock market functions not only as a venue for wealth accumulation but also as a stage for identity signaling.
When Losers Talk: Information Diffusion, Social Norms, and Conversations of Investors, Financial Management, Forthcoming.
o Presentations: 2021 FMA annual meeting, 2020 KAFA-KCMI Joint Symposium, University of California San Diego, University of North Dakota, Monash University, North Dakota State University, San Diego State University
Abstract: Conversations are vessels through which information travels. To understand how investment information spreads via person-to-person conversations, I observe paired investors in a well-controlled experiment. While self-enhancement bias suggests that investors are more likely to discuss their performance when they have positive returns, I find the reverse: in conversations, investors with positive returns appear less likely to talk about their investment outcome. Experimental transcripts highlight conversational norms as a key mechanism. For example, though sharing information about one's positive performance may feel good, it may also have a negative effect on the listener, and making one's counterpart feel bad is often considered socially inappropriate. Thus, in the experiment, investors with positive returns are reluctant to discuss their performance if they are uncertain about their conversation partner's return, or if they learn it is negative. These results show that conversational norms shape the diffusion of investment information.
WORKING PAPERS
Partisan Ingroup-Outgroup Bias in Investment Decisions (With Yongqiang Chu, Chih Ming Tan, and Ruiyao Zhu)
o Presentations: 2025 FMA annual meeting, University of North Dakota
Abstract: We experimentally document a novel “negative peer effect” in financial markets: investors actively trade against recommendations from political opponents. Using over 30,000 investment decisions, we show that investors both follow politically aligned peers and oppose misaligned peers. We also show the effect is mainly (but not entirely) driven by investors’ inferring the political leanings of firms based on the peer recommenders’ ideologies. These partisan biases persist even with the presence of transparent fundamentals (earnings guidance, analyst targets), indicating that investors derive direct utility (disutility) from investing in politically aligned (misaligned) firms.
Managerial Avoidance at Annual General Meetings and ESG Reputational Risk: Evidence from South Korea (With Daewoung Choi, Jieun Im, Yong Hyuck Kim, and Hojong Shin) (Under Review)
Political ideology and sustainable investment: disentangling ethical motives from uncertainty perceptions (With Peter Ammermann, Yong Hyuck Kim, Asli Salih, and Hojong Shin)
Understanding the Mechanism behind the Ownership Bias
WORK IN PROGRESS
Social Interaction and Reference Point Adaptation
Social Interaction and Disposition Effect