"The Trade-off Theory of Corporate Capital Structure" with Hengjie Ai and Murray Frank.
Oxford Research Encyclopedia of Economics and Finance, 2021. [published version]
"How Does Removing the Tax Benefits of Debt Affect Firms? Evidence from the 2017 US Tax Reform"
Covered in: Columbia Law School Blue Sky Blog, Duke University's FinReg Blog
Presentations (including scheduled): 2023 AFA, 2022 WFA, 2022 FIRS, 2022 MFA, 2022 E(astern)FA, American University.
"Dissecting the Listing Gap: Mergers, Private Equity, or Regulation?" with Gabriele Lattanzio and William Megginson. [Internet Appendix]
Revise and Resubmit
Covered in: Columbia Law School Blue Sky blog
Presentations (including scheduled): 2019 CICF, 2019 DC Juniors conference, 2019 EFA, 2019 FMA (Latin America), 2018 Paris Financial Management (keynote speech), 2019 INFINITI (University of Glasgow), 2019 M&A Research Centre Conference at City University London, and 2019 SIOE (Stockholm School of Economics), 2018 Economics and Management of Networks, 2022 World Finance Conference, Florida State University, Peking University, SUNY Buffalo, University of Alabama, University of Graz, University of Oklahoma, Universit ́e Paris Dauphine, King Fahd University of Petroleum and Minerals.
The abnormal decline in the number of US public firms is often blamed on merger activity, private equity investments, and stock market regulations. We compare and quantify the effects of these channels on the evolution of the US listing gap in a unified framework. In the US, an extra 100 mergers is associated with 22.01 additional missing public firms, whereas an extra 100 private equity deals is associated with 3.62 fewer missing listings. Regulatory changes, particularly the Sarbanes–Oxley Act of 2002, are also estimated to have a significant role in the decline of US listings. A one standard deviation increase in regulatory costs is associated with a 15.87% expansion of the US listing gap, which is equivalent to 892.8 missing public US firms. We also specify the types of mergers and private equity deals that most strongly affect listings in the US. Finally, we document that listing gaps emerge in other developed economies, with a few years of delay. The non-US listing gaps are driven by similar forces as in the US.
*A previous version of this paper was titled "Listing Gaps, Merger Waves, and the Privatization of American Equity Finance."
"How Does Labor Mobility Affect Corporate Leverage and Investment?" [Internet Appendix]
Revise and Resubmit
Presentations: AFA (PhD poster session), EFA, Econometric Society (North America), FMA, MFA, American University, Cornerstone Research, Florida State University, University of Minnesota, University of Oklahoma, University of Wisconsin-Madison.
Using state-level shocks to workers’ mobility across firms, I show that an increase in labor mobility is related to a decrease in firms use of debt and investment rates. The effects are concentrated in firms that rely on high-skill workers. I develop a dynamic model that provides an economic mechanism to rationalize these findings. In the model, firms make investment and financing decisions, hire labor with different levels of skill and mobility, and set wages through bargaining. Skilled workers with high mobility receive high-value outside job offers more frequently. Firms that rely on this type of labor operate with low leverage in anticipation of the outside offer shocks, to increase financial flexibility that helps them retain their workforce against those shocks. The differences in investment are generated both by the capital-labor complementarity and by the differences in financing policies, which affect the cost of capital. I estimate the model to quantify the effects of changes in workers’ mobility, for example, because of new government policies or the rise of remote work. Counterfactual analyses show that such changes in workers’ mobility have a sizable impact on financing, investment, hiring, and wages in high-skill firms, but little effect on low-skill firms.
Tests using American data from 1970 to 2015 support the behavioral hypothesis that firms Cater to investor whims. We show that the standard tests cannot distinguish between the behavioral interpretation, and a rational model in which the firm optimally chooses investment, equity issuance, and dividends; while investors optimally choose consumption, equity, and bank account deposits. The rational model shows the importance of two-way financial flows between investors and firms that are generally ignored in the literature. Using booms, sentiment, and behavioral mispricing measures, we construct new tests of behavioral Catering Theory. In all cases that theory is rejected.
Work in Progress:
"Comparing Allocation Efficiency in Public and Private Equity Markets" with Ioannis Spyridopoulos.
"Federal Funds and Corporate Investment: The Equity Financing Channel" with Mehdi Beyhaghi, Murray Frank, and Ping McLemore
"Corporate Debt Constraints" with Murray Frank.
"Data Processing, Information Asymmetry, and Financing Decisions" with Ioannis Spyridopoulos.
American University, Kogod School of Business.
Advanced Quant Methods and Machine Learning in Finance (G), 2022--present.
Business Finance (UG), 2018--present.
University of Minnesota, Carlson School of Management.
Finance Fundamentals (UG), 2015--2016.