Working Papers

We study the calculation of exact p-values for a large class of non-sharp null hypotheses about treatment effects in a setting with data from experiments involving members of a single connected network. The class includes null hypotheses that…

Daily mutual fund (MF) flows are highly persistent and price-destabilizing, and short-sellers (SSs) trade strongly in the opposite direction to these flows. This negative relation is associated with the expected component of MF flows (based on…

This paper introduces a new measure of firm’s exposure to systematic distress risk — the probability of a recession at the time of a firm’s failure. For stocks in the top quintile of the probability of failure, a median hedge portfolio based on…

Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by showing that employment decisions are constrained by firms’ financial health and liquidity. Our…

A portion of the global wealth portfolio is directed towards a safe and liquid reserve asset, which recently has been the US Treasury bond. Our model links the determination of reserve asset status to relative fundamentals and relative debt sizes…

I develop a simple hold-up model of political risk, which can be used to explore firms’ strategic options when their investments are subject to the threat of government expropriation. In the model, a firm decides whether to invest and then the…

We present a theory in which the key driver of short-term debt issued by the financial sector is the portfolio demand for safe and liquid assets by the non-financial sector. This demand drives a premium on safe and liquid assets that the…

A fixed cost investment in home automation technology can eliminate consumers’ marginal costs of responding to changing demand conditions. We estimate the welfare effects of a home automation technology using a field experiment run by a large…

In this paper we study the problems of estimating heterogeneity in causal effects in experimental or observational studies and conducting inference about the magnitude of the differences in treatment effects across subsets of the population. In…

This paper examines whether protest associated with the “long protest wave” of the 1960s and 1970s positively influenced private-sector union support. Past research has found no such influence. We use measures designed to more closely represent…

Two key features of the government bailout programs implemented in the 2008- 2009 financial crisis were: first, the general opposition of voters to these programs and second, the implementation of a variety of interventions, ranging from targeted…

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 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…

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…

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…

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…