Publications

We identify a “slope” factor in exchange rates. High interest rate currencies load more on this slope factor than low interest rate currencies. This factor accounts for most of the cross-sectional variation in average excess returns between high…

Survey from Stanford University’s Rock Center for Corporate Governance and Heidrick & Struggles has uncovered surprises…

By many measures, current CEOs should be the best candidates to serve on the board of directors. However, recent survey evidence suggests this may not be the case. Should companies reassess the importance of this criteria when looking for new…

We have devised two special modules for De Nederlandsche Bank (DNB) Household Survey to measure financial literacy and study its relationship to stock market participation. We find that the majority of respondents display basic financial…

This paper explores the impact of investor flows and financial market conditions on returns in crude-oil futures markets. I begin with a review of the economic mechanisms by which informational frictions and the associated speculative…

Studies of consumer decision making often begin with the identification of a dimension on which options differ, followed by an analysis of the factors that influence preferences along that dimension. Building on a conceptual analysis of a diverse…

How does an economy behave if (1) fundamentals are truly hump-shaped, exhibiting momentum in the short run and partial mean reversion in the long run, and (2) agents do not know that fundamentals are hump-shaped and base their beliefs on…

This research examines the hypothesis that religiosity has two competing psychological influences on the social welfare attitudes of contemporary Americans. On the one hand, religiosity promotes a culturally based conservative identity, which in…

I am grateful for comments from Viral Acharya, Lewis Alexander, Niki Anderson, Peter Axilrod, Dick Berner, Markus Brunnermeier, Stacey Coleman, Rob Engle, Mike Fishman, Mark Flood, John Gidman, Tobi Guldimann, Anil Kashyap, John Khambu, Arvind…

Using an extensive longitudinal data set on franchising firms, we show that established franchisors manage their portfolio of company and franchised units to maintain a particular target level of corporate control and ownership of outlets. On…

Firms operate in a capital market, a product market, and a market for social pressure directed at them by social activists, NGOs, and governments. An equilibrium in these three markets yields a three-equation structural model that relates…

This paper investigates the market reaction to recent legislative and regulatory actions pertaining to corporate governance. The managerial power view of governance suggests that executive pay, the existing process of proxy access, and various…

We show whether central clearing of a particular class of derivatives lowers counterparty risk. For plausible cases, adding a central clearing counterparty (CCP) for a class of derivatives such as credit default swaps reduces netting…

The U.S. tri-party repo market is used by major broker-dealers to finance their securities inventories. During the financial crisis of 2007-2009, particularly around the failures of Bear Stearns and Lehman Brothers, it became apparent that this…

Ever wonder why that government clerk was so rude and condescending? Or why the mid-level manager at your company always doles out the most demeaning tasks? Or, on a more profound level, why the guards at Abu Ghraib tortured and humiliated their…

This article explores the relationship between an ethnic-based social network and vertical integration decisions in the laundry services industry. We find that stores in the social network are significantly less likely to vertically…

This paper presents a theory of common agency lobbying in which policy-interested lobbies can first influence the choice of a proto-coalition and then influence the legislative bargaining over policy within that coalition. The equilibrium policy…

We find that several recently proposed consumption-based models of stock returns, when evaluated using an optimal set of managed portfolios and the associated model-implied conditional moment restrictions, fail to capture key features of…

Better measurement of the output produced and capital employed by firms substantially improves the ability to explain capital structure variation in the cross section. For every firm, we construct the set of other firms producing the same output…