SELECTED PUBLICATIONS
“A Language-Based Approach to Measuring Creative Exploration” with Vladimir Gatchev and Buvaneshwaran Venugopal, Research Policy, forthcoming, 2022
We propose a new measure of the exploratory activities of companies based on the idea that experimentation with new courses of action and the need to describe them entails the adoption of new words in firm regulatory disclosures. Unlike traditional indicators, such as R&D spending, the proposed exploration indicator is available for all publicly traded firms across all industries. The exploration indicator predicts firm knowledge accumulation, as measured by future patenting and trademarking activities. It further shows that firm exploration declines after periods of high R&D spending and over time. The exploration indicator correlates positively with firm risk and exhibits a distinct positive impact on firm value unexplained by traditional innovation indicators. Our language-based approach can be applied to measure creative contributions in other domains, such as government grant applications and academic publications.
“The Deterrent Effect of Insider Trading Enforcement Actions” with Robert Davidson, The Accounting Review, forthcoming, 2022
We analyze whether exposure to an SEC insider trading enforcement action affects how insiders trade. We find that following an insider trading enforcement action at one firm, exposed insiders earn significantly lower abnormal profits from their trades at other firms compared to non-exposed insiders. The deterrent effect is stronger when a fellow insider is convicted and is similarly significant both pre- and post-SOX. Following the enforcement event, exposed insiders do not trade less frequently, but do trade significantly fewer shares per trade. Insiders who have witnessed an enforcement action have a lower probability for future conviction than their unexposed peers.
“Efficient Market Managers” with Vladimir Atanasov and Qinghai Wang, Quarterly Journal of Finance, forthcoming, 2021
We examine the effect of the Efficient Market Hypothesis (EMH) on the investment behavior of mutual fund managers and show that managers who are more likely to be exposed to the ideas of EMH throughout their higher education are more “passive” than their unexposed peers: they are more likely to manage index funds, and when managing active funds, they hold portfolios with larger numbers of stocks and deviate less from their investment benchmarks. Exposed managers, however, take more systematic risks. Although academic exposure to the EMH does not result in better performance, it helps professional investors generate capital inflows.
“Attitudes towards Non-compliance and the Demand for External Finance” with Robert Davidson, Journal of Financial and Quantitative Analysis 54, 2019, 967–991
We study the link between individual propensity to violate moral principles and demand for finance and find that individuals who are more tolerant of moral principle violations are more likely to borrow. Reverse causality and individual attitudes towards risk are unlikely explanations of our findings. We contend that non-compliance relaxes participation constraints in capital markets by lowering the psychological costs of entering and breaking a contract.
“How Do Acquirers Choose Between Mergers and Tender Offers?” with David Offenberg, Journal of Financial Economics 116, 2015, 331-348
We develop a theory for the choice of acquisition method in takeovers. Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers.
“Social Influence in the Housing Market” with Carrie Pan, Journal of Financial and Quantitative Analysis 50, 2015, 757-779
“Employees and the Market for Corporate control” with Antonio Macias, Journal of Corporate Finance 31, 2015, 33-53
“Confidence and Economic Attitudes”, Journal of Economic Behavior and Organization 91, 2013, 139-158
“Geographic Proximity and Price Discovery: Evidence from NASDAQ” with Amber Anand, Vladimir Gatchev, Leonardo Madureira, and Shane Underwood, Journal of Financial Markets 14, 2011, 193-226; lead article
“Market Segmentation and the Cost of Capital in a Domestic Market: Evidence from Municipal Bonds” with Qinghai Wang, Financial Management 40, 2011, 455-481
“Geographic Location and Corporate Finance: A Review” for Handbook of Emerging Issues in Corporate Governance, World Scientific Publishing, 2010
"The Role of Underwriter-Investor Relationships in the IPO Process,” with Murat Binay and Vladimir Gatchev, Journal of Financial and Quantitative Analysis 42, 2007, 785-810
“Why Do Firms Become Widely Held? An Analysis of the Dynamics of Corporate Ownership,” with Jean Helwege, and Rene Stulz, Journal of Finance 62, 2007, 995 – 1028; lead article
“Does Corporate Headquarters Location Matter for Stock Returns?” with Qinghai Wang, Journal of Finance 61, 2006, 1991-2015; profiled in the New York Times
SELECTED WORKING PAPERS
“Terrorist Attacks and Management Earnings Forecasts” with Augustine Duru, Yangyang Fan, and Mikhail Pevzner, Journal of Accounting and Public Policy, 2nd round
“Financial Reporting Fraud and Delegated Investment” with Robert Davidson and Hanjiang Zhang, under review
“Women in the Boardroom and Cultural Beliefs about Gender Roles” with R. David McLean and Mengxin Zhao, under review
“A Language-Based Approach to Measuring Creative Exploration” with Vladimir Gatchev and Buvaneshwaran Venugopal, Research Policy, forthcoming, 2022
We propose a new measure of the exploratory activities of companies based on the idea that experimentation with new courses of action and the need to describe them entails the adoption of new words in firm regulatory disclosures. Unlike traditional indicators, such as R&D spending, the proposed exploration indicator is available for all publicly traded firms across all industries. The exploration indicator predicts firm knowledge accumulation, as measured by future patenting and trademarking activities. It further shows that firm exploration declines after periods of high R&D spending and over time. The exploration indicator correlates positively with firm risk and exhibits a distinct positive impact on firm value unexplained by traditional innovation indicators. Our language-based approach can be applied to measure creative contributions in other domains, such as government grant applications and academic publications.
“The Deterrent Effect of Insider Trading Enforcement Actions” with Robert Davidson, The Accounting Review, forthcoming, 2022
We analyze whether exposure to an SEC insider trading enforcement action affects how insiders trade. We find that following an insider trading enforcement action at one firm, exposed insiders earn significantly lower abnormal profits from their trades at other firms compared to non-exposed insiders. The deterrent effect is stronger when a fellow insider is convicted and is similarly significant both pre- and post-SOX. Following the enforcement event, exposed insiders do not trade less frequently, but do trade significantly fewer shares per trade. Insiders who have witnessed an enforcement action have a lower probability for future conviction than their unexposed peers.
“Efficient Market Managers” with Vladimir Atanasov and Qinghai Wang, Quarterly Journal of Finance, forthcoming, 2021
We examine the effect of the Efficient Market Hypothesis (EMH) on the investment behavior of mutual fund managers and show that managers who are more likely to be exposed to the ideas of EMH throughout their higher education are more “passive” than their unexposed peers: they are more likely to manage index funds, and when managing active funds, they hold portfolios with larger numbers of stocks and deviate less from their investment benchmarks. Exposed managers, however, take more systematic risks. Although academic exposure to the EMH does not result in better performance, it helps professional investors generate capital inflows.
“Attitudes towards Non-compliance and the Demand for External Finance” with Robert Davidson, Journal of Financial and Quantitative Analysis 54, 2019, 967–991
We study the link between individual propensity to violate moral principles and demand for finance and find that individuals who are more tolerant of moral principle violations are more likely to borrow. Reverse causality and individual attitudes towards risk are unlikely explanations of our findings. We contend that non-compliance relaxes participation constraints in capital markets by lowering the psychological costs of entering and breaking a contract.
“How Do Acquirers Choose Between Mergers and Tender Offers?” with David Offenberg, Journal of Financial Economics 116, 2015, 331-348
We develop a theory for the choice of acquisition method in takeovers. Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers.
“Social Influence in the Housing Market” with Carrie Pan, Journal of Financial and Quantitative Analysis 50, 2015, 757-779
“Employees and the Market for Corporate control” with Antonio Macias, Journal of Corporate Finance 31, 2015, 33-53
“Confidence and Economic Attitudes”, Journal of Economic Behavior and Organization 91, 2013, 139-158
“Geographic Proximity and Price Discovery: Evidence from NASDAQ” with Amber Anand, Vladimir Gatchev, Leonardo Madureira, and Shane Underwood, Journal of Financial Markets 14, 2011, 193-226; lead article
“Market Segmentation and the Cost of Capital in a Domestic Market: Evidence from Municipal Bonds” with Qinghai Wang, Financial Management 40, 2011, 455-481
“Geographic Location and Corporate Finance: A Review” for Handbook of Emerging Issues in Corporate Governance, World Scientific Publishing, 2010
"The Role of Underwriter-Investor Relationships in the IPO Process,” with Murat Binay and Vladimir Gatchev, Journal of Financial and Quantitative Analysis 42, 2007, 785-810
“Why Do Firms Become Widely Held? An Analysis of the Dynamics of Corporate Ownership,” with Jean Helwege, and Rene Stulz, Journal of Finance 62, 2007, 995 – 1028; lead article
“Does Corporate Headquarters Location Matter for Stock Returns?” with Qinghai Wang, Journal of Finance 61, 2006, 1991-2015; profiled in the New York Times
SELECTED WORKING PAPERS
“Terrorist Attacks and Management Earnings Forecasts” with Augustine Duru, Yangyang Fan, and Mikhail Pevzner, Journal of Accounting and Public Policy, 2nd round
“Financial Reporting Fraud and Delegated Investment” with Robert Davidson and Hanjiang Zhang, under review
“Women in the Boardroom and Cultural Beliefs about Gender Roles” with R. David McLean and Mengxin Zhao, under review
