Working Papers

Equity is a cheap source of funding for a country’s largest financial institutions. In a large panel of 31 countries, we find that the stocks of a country’s largest financial companies earn returns that are significantly lower than stocks of non-…

We provide the first large-sample evidence of banks playing an important role in facilitating tax planning by client firms. Capturing bank-client relationships using lending contracts and measuring borrower tax avoidance with the three-year cash…

Under 2nd Review, Management Science

Women pursue managerial credentials at nearly the same rate as men but evidence suggests they receive lower salaries from the onset of their managerial careers. While demand-side…

This paper examines the effect of market participants’ information processing costs on firms’ disclosure choice. Using the recent extensible Business Reporting Language (XBRL) regulation as an exogenous shock to these information processing costs…

I discuss the motivations and actions (or inaction) of individuals in the financial system, governments, central banks, academia and the media that collectively contribute to the persistence of a dangerous and distorted financial system and…

This paper quantitatively assesses time inconsistency, moral hazard, and political ideology in monopoly regulation of electricity distribution. We specify and estimate a dynamic model of utility regulation featuring investment and moral hazard.…

Since its rapid rise in early 2009, scholars have advanced a variety of explanations for popular support for the Tea Party movement. Here we argue that various political, economic, and demographic trends and events – e.g., the election of the…

We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent-…

Salient successes and failures, such as spectacular venture capital investments or agonizing bankruptcies, affect consensus beliefs about the viability of particular markets. We argue that collective sense making in the wake of such vital events…

We study the convergence of the predictive surface of regression trees and forests. To support our analysis we introduce a notion of adaptive concentration for regression trees. This approach breaks tree training into a model selection phase in…

We study the subgame perfect equilibria of two player stochastic games with perfect monitoring and geometric discounting. A novel algorithm is developed for calculating the discounted payoffs that can be attained in equilibrium. This algorithm…

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…

We develop a model of advertising markets in an environment where consumers may switch (or “multi-home”) across publishers. Consumer switching generates inefficiency in the process of matching advertisers to consumers, because advertisers may not…

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…

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 success through the efforts…

We show that the allocation of failed banks in the Great Recession was likely distorted because potential acquirers of these banks were poorly capitalized. We illustrate this phenomenon within a model of auctions with budget constraints. In our…

Marriage can substitute for formal business contracts, especially in environments that lack a well-established system of contract or corporate law. In such settings, marriage can facilitate the efficient organization of labor and capital. In this…

We present a rational theory of reform fatigue. At each instant a politician chooses to divide effort between reforms and the status quo, and this choice is modeled as a two-armed bandit problem. Reforms are expected to yield a higher rate of…

This paper examines Meg Whitman’s tenure as HP’s CEO from September 2011 till March 2016. It considers the external contextual forces shaping radical changes in the information technology industry as well as the internal contextual forces…