Publications

We consider a class of nonlinear mappings FAN in RN indexed by symmetric random matrices with independent entries. Within spin glass theory, special cases of these mapping correspond to iterating the TAP equations and were studied by…

For-profit and nonprofit organizations exist for different reasons: for-profits to generate a return on investment for shareholders, and nonprofits to pursue charitable and social activities unrelated to commerce. The obligations of the boards of…

Using hand-collected data on divisional managers at conglomerates, we find that a change in industry surplus in one division generates large spillovers on managerial payoffs in other divisions of the same firm. These spillovers arise only within…

We provide a theory of the determination of exchange rates based on capital flows in imperfect financial markets. Capital flows drive exchange rates by altering the balance sheets of financiers that bear the risks resulting from international…

We study optimal disclosure via two competing communication channels; hard information whose value has been verified and soft disclosures such as forecasts, unaudited statements and press releases. We show that certain soft disclosures may…

We propose a new method of testing asset pricing models that relies on using quantities rather than simply prices or returns. We use the capital flows into and out of mutual funds to infer which risk model investors use. We derive a simple test…

We propose a new method of testing asset pricing models that relies on using quantities rather than simply prices or returns. We use the capital flows into and out of mutual funds to infer which risk model investors use. We derive a simple test…

Forthcoming in Review of Accounting Studies

This study examines the information content of quarterly earnings announcements. We first use a nonparametric approach to investigate whether quarterly earnings announcements are…

Systemic risk arises when shocks lead to states where a disruption in financial intermediation adversely affects the economy and feeds back into further disrupting financial intermediation. We present a macroeconomic model with a financial…

The largest commercial bank stocks, ranked by total size of the balance sheet, have significantly lower risk-adjusted returns than small- and medium-sized bank stocks, even though large banks are significantly more levered. We uncover a size…

This paper tests the proposition that politicians and their affiliated firms (i.e., firms operating in their province) temporarily suppress negative information in response to political incentives. We examine the stock price behavior of Chinese…

This paper discusses the phenomenon of “built to become:” an open-ended ongoing process for which there is no grand ex ante plan possible and which unfolds through a series of transformations in the course of the strategic evolution of…

In this paper we study stochastic dynamic games with many players; these are a fundamental model for a wide range of economic applications. The standard solution concept for such games is Markov perfect equilibrium (MPE), but it is well…

Charles Lindblom’s 1959 essay “The Science of ‘Muddling Through’” is best known for the strategy of decision making—disjointed incrementalism—that it recommended. That famous paper and Lindblom’s related work also provided two theories: a…

This paper expands on Brunnermeier, Gorton and Krishnamurthy (2011) and implements a liquidity measure, “Liquidity Mismatch Index (LMI),” to gauge the mismatch between the market liquidity of assets and the funding liquidity of liabilities. We…

We explore the effects of television advertising in the setting of the NFL’s Super Bowl telecast. The Super Bowl is the largest advertising event of the year and is well suited for measurement. The event has the potential to create significant…

Deadly factory fires. Illegal pollution. Injured workers. Many brands have recently been tarnished by publicity of suppliers’ labor and environmental violations. This paper provides guidance to buyers as to how they…

We examine whether acquisitions are more profitable for acquirers when the firms they target disclose higher-quality accounting information. If accounting information reduces uncertainty in the value of the target firm by facilitating a more…

Sales agents are impatient relative to owners. If a good fails to sell, the owner still retains possession of that good and can enjoy its services, whereas the agent receives nothing. As a consequence, sales agents prefer a lower price than does…

An important characteristic of most renewable energy sources is intermittency in their ability to generate electricity. Yet, intermittency is usually ignored in life-cycle cost calculations intended to assess the competitiveness of electric power…