Working Papers

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…

We examine the link between corporate governance, managerial incentives, and corporate tax avoidance. Similar to other investment opportunities that involve risky expected cash flows, unresolved agency problems may lead managers to engage in more…

Many lament that weak accountability and poor governance impede economic development in Africa. Politicians rely on ethnic allegiances that deliver the vote irrespective of performance, dampening electoral incentives. Giving voters…

Statistical default models, widely used to assess default risk, fail to account for a change in the relations between different variables resulting from an underlying change in agent behavior. We demonstrate this phenomenon using data on…

Which budgetary institutions result in efficient provision of public goods? We analyze a model with two parties bargaining over the allocation to a public good each period. Parties place different values on the public good, and these…

Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares…

Older wealthholders spend down assets slowly. To study this pattern, the paper introduces health-dependent utility into a model in which different preferences for bequests, expenditures when in need of long-term care (LTC), and ordinary…

Research across disciplines presumes that market categories will have strong boundaries. Categories without well-defined boundaries typically are not useful so are expected to fade away. We suggest many contexts contain lenient market…

This project explores whether and how corporations become more receptive to social activist challenges over time. Drawing from social movement theory, we suggest a dynamic process through which contentious interactions lead to increased…

Recent Medicare legislation has been directed at improving patient care quality by stopping reimbursement of hospital-acquired conditions (HACs). However, this policy may be undermined if some providers respond by upcoding, a practice…

We show that the vast majority of low-income high achievers do not apply to any selective college. This is despite the fact that selective institutions typically cost them less, owing to generous financial aid, than the two-year and nonselective…

A central counterparty (CCP) is a financial market utility that lowers counterparty default risk on specified financial contracts by acting as a buyer to every seller, and as a seller to every buyer. When at risk of failure, a CCP could be…

An emergent theme in the study of organizations is the broad differences in managerial practice and performance across firms. We develop an explanation for these phenomena that turns on the complexity of the environments that firms…