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, 2023 (Job Market Paper; Solo-authored)

Read: (SSRN link)

Abstract: Using a hand-collected sample of industrial 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. I find that firms with sticky costs avoid risky financial investments because of expected liquidity needs and the trade-off between operating and financial risk. Oster’s delta, difference-in-differences analysis, and synthetic control method address endogeneity concerns. For industrial firms with sticky costs, investing in risky securities subdues non-financial investments and increases a firm’s risk exposure without creating shareholder value.

Presentations: Hawaii Accounting Research Conference (HARC) (2024, expected), 4th Annual Boca-European Corporate Governance Institute (ECGI) Corporate Finance and Governance Conference (2023, expected), University of Arizona (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), Financial Management Association (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: (SSRN 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: (JFQA 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)



The Rise and Fall of California's Director Diversity Mandate: Evidence from Assembly Bill No. 979, 2023 (with Kathleen M. Kahle, Daniel Greene, and Vincent Intintoli)

Read: (link)

Abstract: We examine California Assembly Bill 979 (AB 979), the first law mandating racial, ethnic, and other forms of diversity on corporate boards. We find negative stock market reactions to the enactment of the law and positive returns when the law is overturned 18 months later. Returns to both events are economically large with statistically significant conventional test statistics. However, after controlling for cross correlations between firms, the statistical significance disappears. Regardless, 90% of firms comply with the first stage of the mandate. DiD analysis shows few differences in the characteristics of minority directors appointed following the law, relative to two separate benchmarks. Lastly, despite evidence of a deep labor market for minority directors, investors at firms with the most positive reactions to the enactment of AB 979 also react positively to its overturning, suggesting that some investors reversed their initial support of the law.

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)