Research

Research Interests

Empirical Corporate Finance, Liquidity Management, Payout Policy, Mergers and Acquisitions, Corporate Social Responsibility, Environmental, Social, and Corporate Governance (ESG)

Selected Works

Asymmetric Cost Behavior and Non-Financial Firms' Risky Financial Investments, 2024

Read: (SSRN link)

Abstract: Using hand-collected data on non-financial firms’ financial portfolios, I examine how asymmetric cost behavior (or cost stickiness) affects risky financial investments. Sticky costs amplify the downward effect of sales decrease on profits because costs do not fall when sales decrease by as much as they rise when sales increase. Firms with sticky costs avoid risky securities because of expected liquidity needs and the trade-off between operating and financial risk. Oster’s delta and shock-based instrumental variable design address endogeneity concerns. For firms with sticky costs, investing in risky securities subdues non-financial investments and increases risk exposure without creating shareholder value.

Presentations: Hawaii Accounting Research Conference (HARC) (2024), 4th Annual Boca-European Corporate Governance Institute (ECGI) Corporate Finance and Governance Conference (2023), University of Mississippi (2023), University of South Carolina (2023), Monash University (2023), Clemson University (2023), Rochester Institute of Technology (2023), University of Arizona (2023), Financial Management Association (FMA) Doctoral Student Consortium (2023), American Accounting Association (AAA) Annual Meeting (2023), AAA Spark Meeting - Western (2023), AAA Southwest Region Meeting (2023), Southwestern Finance Association Annual Meeting (2023), Southern Finance Association (SFA) Annual Meeting (2022), FMA Annual Meeting (2022), World Finance Conference (2022), Financial Markets and Corporate Governance Conference (2022)

Non-Regular Employment and Payout Policy: Evidence from the Massachusetts Independent Contractor Law, 2023 (with Kathleen M. Kahle)

Forthcoming in Management Science

Read: (Link)

Abstract: Compared with regular employees, independent contractors (IC) offer labor flexibility and cost savings to their employers. Using a difference-in-differences (DID) design around the 2004 Massachusetts law that discourages IC usage, we find that this exogenous decrease in IC usage makes treated firms’ earnings more sensitive to changes in sales, increases labor-related expenses, and reduces profitability. Firms subsequently reduce share repurchases. The decrease is more pronounced for firms with high operating leverage and financial constraints. Our results are robust to entropy balancing. We conclude that IC usage affects firms’ operating leverage and profitability, which in turn influences payout policy.

Presentations: Eastern Finance Association Annual Meeting (2021), European Financial Management Association Annual Meeting (2021), Southwestern Finance Association Annual Meeting (2021), Southern Finance Association (SFA) Annual Meeting (2020), University of Arizona (2019, 2020)

(No co-author presentation)

The Effects of Antitrust Laws on Horizontal Mergers: International Evidence, 2023 (with Iftekhar Hasan, Incheol Kim, and Chuneyoung Chung)

Forthcoming in Journal of Financial & Quantitative Analysis

Read: (Link)

Abstract: This study examines how antitrust law adoptions affect horizontal merger and acquisition outcomes. Using the staggered introduction of competition laws in 20 countries, we find antitrust regulation decreases acquirers’ 5-day cumulative abnormal returns surrounding horizontal merger announcements. A decrease in deal value, target book assets, and industry peers' announcement returns are consistent with the market power hypothesis. Exploiting antitrust law adoptions addresses a downward bias to an estimated effect of antitrust enforcement. The potential bias from heterogeneous treatment effects does not nullify our results. Overall, antitrust policies seem to deter post-merger monopolistic gains, potentially improving customer welfare.  

Presentation: Financial Management Association (FMA) Annual Meeting (2021)

(No co-author presentation)

Reconciling the Evidence on Board Diversity Mandates: A Market Learning Explanation, 2023 (with Kathleen M. Kahle, Daniel Greene, and Vincent Intintoli)

Currently revising for resubmission.

Abstract: We examine California Assembly Bill No. 979 (AB 979), the first law mandating racial, ethnic, and other forms of diversity on corporate boards. After controlling for cross correlations between firms, we find statistically insignificant stock market reactions to both the enactment of the law and the overturning of the law 18 months later, suggesting that the law is value neutral for firms. However, at least 90% of firms comply with the first stage of the mandate and the qualifications of mandated directors are largely similar to those of other directors appointed over the same period. We interpret our results in light of the previously documented negative valuation effects for a California law (Senate Bill No. 826) mandating gender diversity on corporate boards. Overall, the evidence is consistent with a market learning explanation, where investors initially are skeptical about board diversity mandates, but learn slowly over time as firms add diverse directors to their board, and eventually perceive diversity mandates as value neutral. Thus, our statistically insignificant findings around the enactment of AB 979 are economically meaningful because they lead to a deeper understanding of investor perceptions of board mandates.

Media Coverage: USA Today (February 21, 2022)

Does Mandatory Disclosure Improve Workplace Human Rights? Evidence from the California Transparency in Supply Chains Act, 2022 (with Iftekhar Hasan and Incheol Kim)

Read: (Link)

Abstract: In 2012, the California legislature requires firms to disclose their efforts to mitigate forced labor practices associated with their supply chains. Exploiting this regulatory change, this paper examines how mandatory disclosure affects a firm’s human rights standards. We estimate that mandatory disclosure induces firms to improve their Human Rights Score by 15.1% relative to the average sample firms. More specifically, treated firms become more active than control firms in eradicating forced labor, improving employee health and safety within a supply chain, and choosing their business partners based on human rights criteria. Those firms also receive smaller fines for their suppliers’ occupational safety violations and experience fewer negative news reports on labor issues. Mandatory disclosure, in turn, raises firm sales and profitability. Overall, our findings suggest that mandated disclosure improves not only employee welfare but also shareholder wealth.

Presentations: Eastern Finance Association Annual Meeting (2022), Financial Management Association (FMA) Annual Meeting (2021), Southwestern Finance Association Annual Meeting (2021)

(No co-author presentation)

Work-in-Progress

Annual Report Readability and Non-Financial Firms' Risky Financial Investments

Presentation: University of Arizona (2021)