Working Papers

These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.

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Salman Arif, Azi Ben-Rephael, Charles M. C. Lee
February 24, 2017

Daily directional trading by mutual funds (MFs) is highly-persistent and price-destabilizing, leading to return reversals lasting months.  This effect is distinct from the “flow-induced trading” phenomenon in prior studies.  At the same time, short-sale volume...

Charles M. C. Lee, Ken Li
February 14, 2017

Predicted stock issuers (PSIs) are firms with expected “high-investment and low-profit” (HILP) profiles that earn unusually low returns.  Over a 36-year period (1978-2013), average returns to top-decile PSIs are indistinguishable from Treasury yields.  We show...

Peter C. Psarras, Praveen Bains, Panuya Charoensawadpong, Mark Carrington, Stephen Comello, Stefan J. Reichelstein, Jennifer Wilcox
January 2017

It is well documented that a concerted effort is required to reduce the threat of climate change. One vital component in this portfolio of solutions — carbon capture and utilization — has been stalled by...

Lisa De Simone, Jordan Nickerson, Jeri K. Seidman, Bridget Stomberg
December 16, 2016

Can common empirical tests reliably identify tax avoidance? This is an important question because our understanding of the determinants of tax avoidance largely depends on results generated using such tests. We seed Compustat data...

Lisa De Simone, Lillian F. Mills, Bridget Stomberg
December 15, 2016

We use confidential Internal Revenue Service data on the magnitude of U.S.-foreign intercompany transactions to develop a measure of the likelihood that U.S. multinational entities (MNEs) shift income out of the U.S. Results show...

Stefan J. Reichelstein, Ansu Sahoo
December 2016

A basic tenet of microeconomics is that for a competitive industry in equilibrium the market price of a product will be equal to its marginal cost. This paper develops a model framework and a corresponding...

Lisa De Simone, Richard Sansing
September 1, 2016

This study investigates the use of a cost sharing arrangement (CSA) by multinational corporations (MNCs) to shift the income attributable to valuable intellectual property (IP) to low-tax foreign jurisdictions. Using a strategic tax compliance model,...

Alan D. Jagolinzer, David F. Larcker, Gaizka Ormazabal, Daniel J. Taylor
September 2016

This paper examines the relation between political connections and informed trading by corporate insiders in the context of the Financial Crisis. The unprecedented magnitude of government intervention, the substantial impact of this intervention on firm...

Lisa De Simone, Jing Huang, Linda Krull
July 26, 2016

We investigate how R&D contributes to foreign profit margins in U.S. multinational corporations (MNCs) through wage savings and income shifting. Our research question is timely and important given rising foreign R&D investments and recent scrutiny by...

Shannon Chen, Lisa De Simone, Michelle Hanlon, Rebecca Lester
July 25, 2016

We study whether innovation box tax incentives, which reduce tax rates on innovation-related income, are associated with tax-motivated income shifting, investment, and employment in the countries that implement these regimes. Using a sample of...

John E. Bistline, Stephen D. Comello, Anshuman Sahoo
July 21, 2016

Many irreversible long-run capital investments entail opportunities for managers to respond flexibly to changes in the economic environment. However, common levelized cost measures designed to guide decision-making implicitly assume that the values of random economic...

Ian D. Gow, Steven N. Kaplan, David F. Larcker, Anastasia A. Zakolyukina
July 6, 2016

Based on two samples of high quality personality data for chief executive officers (CEOs), we use linguistic features extracted from conferences calls and statistical learning techniques to develop a measure of CEO personality in terms...

Stephen D. Comello, Stefan J. Reichelstein, Anshuman Sahoo, Tobias S. Schmidt
July 2016

Rural electrification rates in India lag behind government goals, in part due to the inability of distribution companies (discoms) to fund central grid expansion. In the absence of central grid electrification, mini-grids offer significant potential...

Susan Athey, Guido W. Imbens, Stefan Wager
April 25, 2016

There are many studies where researchers are interested in estimating average treatment effects and are willing to rely on the unconfoundedness assumption, which requires that treatment assignment is as good as random conditional on pre-treatment...

David F. Larcker, Brian Tayan
April 14, 2016

Institutional investors pay considerable attention to the quality of a company’s governance. Unfortunately, it is difficult for outside observers to reliably gauge governance quality. Oftentimes, poor governance manifests itself only after decisions have been made...

David F. Larcker, Brian Tayan
April 12, 2016

Keller Williams is one of the most successful real estate franchises in the world. The leaders of the company attribute its growth in large part to a cultural model that emphasizes profit sharing, interdependence, and...

David F. Larcker, Nicholas E. Donatiello, Brian Tayan
March 3, 2016

CEO compensation is a highly controversial subject. While most company directors believe that CEO pay is not a problem, the majority of the American public believes that it is. The difficulties that boards face in...

Ian D. Gow, David F. Larcker, Peter C. Reiss
February 8, 2016

This paper examines the approaches accounting researchers use to draw causal inferences using observational (or non-experimental) data. The vast majority of accounting research papers draw causal inferences notwithstanding the well-known difficulties in doing so. While...

Charles M. C. Lee, Eric C. So
January 2016

We show that analyst coverage proxies contain information about expected returns.  We decompose analyst coverage into abnormal and expected components using a simple characteristic-based model and show that firms with abnormally high analyst coverage subsequently...

Iván Marinovic
December 1, 2015

We estimate and test a model of voluntary disclosure in which a manager’s information set is uncertain (Dye 1985; Jung and Kwon 1988). In this model, a manager makes his disclosure decision to maximize the market price,...