PUBLICATIONS
The Accounting Review 90(5), September 2015
I hypothesize that financial statement information, by providing information about economic events correlated with future volatility, are informative in the prediction of future volatility and are not fully incorporated in either past volatility or the market's expectation of future volatility.
Review of Accounting Studies 22(3), September 2017
Co-authored with Doron Israeli and Charles M.C. Lee
We find that increased ETF ownership is accompanied by a decline in pricing efficiency for the underlying component securities.
Journal of Law, Economics, and Organization 34(3), August 2018
Co-authored with Zachary Peskowitz
We investigate the causal effect of gubernatorial partisanship on municipal bond issues in the United States using a regression discontinuity design and find that the election of Democratic governors results in higher levels of debt issuance, with an annual per capita increase of approximately $73 to $147 in states that lack debt referenda requirements
Management Science 68 (2), February 2022
Co-authored with Doron Israeli and Ron Kaniel
Consistent with Merton's (1987) investor recognition hypothesis, we find that shocks to trading volume play an important role in enhancing corporate investment activity.
Review of Accounting Studies 27 (2), May 2022
Co-authored with Doron Israeli and Ron Kasznik
Using a daily news pressure index that is largely unpredictable and thus unrelated to managerial strategic disclosure timing decisions, we find that retail but not institutional investors are particularly susceptible to unexpected distractions but that this reduced attention does not impact overall price efficiency.
Management Science 68 (6), June 2022
Co-authored with Dane M. Christensen, Hengda Jin, and Laura A. Wellman
We find that greater political hedging, measured as the degree to which firms' political connections are balanced across Republican and Democratic candidates, is associated with reduced firm risk, particularly during periods of higher policy uncertainty.
The Accounting Review 98 (2), March 2023
Co-authored with Burcu Esmer and N. Bugra Ozel
We examine reducing non-shareholder litigation risk as a specific and quantifiable benefit of reduced disclosure during the IPO period. We show that firms using the confidential filing provision of the JOBS Act are protected from heightened litigation during the pre-IPO period.
"Corporate Political Activism and Information Transfers"
The Accounting Review 99 (3), May 2024
Co-authored with Dane M. Christensen, Hengda Jin, Joshua A. Lee, and Laura A. Wellman
We examine whether there are externalities to the processing of political information by politically active firms and find evidence of stronger intra-industry information transfers from politically active firms to their industry peers.
Journal of Accounting and Economics, forthcoming
Co-authored with Lindsey A. Gallo and Hengda Jin
This paper examines time-series variation in the relationship between aggregate earnings and GDP (AEG). Using quarterly data from 1979-2019, we document that aggregate earnings are positively associated with future real GDP after 2000 but not before. We further show that this variation does not result from an association between aggregate earnings and the corporate profits component of GDP. Instead, we discover that aggregate special items — not core earnings — drive the post-2000 AEG by conveying information about labor market outcomes. Specifically, aggregate special items relate to future GDP only when they predict wages and worker displacement. Our study contributes to the literature by documenting previously unexplored time variation in the AEG relationship and identifying its source, challenging conventional assumptions about how aggregate accounting measures signal future economic conditions.
Journal of Business Finance and Accounting, forthcoming
Co-authored with Mary E. Barth and Doron Israeli
Equity book-to-market ratios (BTM) should not exceed one if a firm’s return on equity exceeds its cost of capital or it employs conservative accounting. Yet, BTM is above one for many firms. We find that this occurs because BTM above one reflects macroeconomic risk. We find that hedge returns for BTM above one are concentrated in recession years. We also find that BTM above one reflects potentially overstated equity book values, but only in non-recession years. Our study calls into question using HML as a return prediction factor for BTM above one and using BTM as a generic measure of conservative accounting or as the key indicator of overstated asset book values.