Research Lab

In this paper, we examine a novel two-stage mechanism for selling government securities, wherein the dealers underwrite in the first stage the sale of securities, which are auctioned in stage 2 via either a discriminatory auction (DA) or a uniform price auction (UPA).

Shared Appreciation Mortgages (SAMs) feature mortgage payments that adjust with house prices. These mortgage contracts are designed to stave off home owner default by providing payment relief in the wake of a large house price shock. SAMs have been hailed as an innovative solution that could prevent the next foreclosure crisis, act as a work-out tool during a crisis, and alleviate fiscal pressure during a downturn. They have inspired Fintech companies to offer home equity contracts. However, the home owner's gains are the mortgage lender's losses.

We construct new measures of country risk and sentiment as perceived by global investors and executives using textual analysis of the quarterly earnings calls of publicly listed firms around the world. Our quarterly measures cover 45 countries from 2002-2020. We use our measures to provide a novel characterization of country risk and to provide a harmonized definition of crises. We demonstrate that elevated perceptions of a country's riskiness are associated with significant falls in local asset prices and capital outflows, even after global financial conditions are controlled for.

This paper examines the impact of mandatory reporting and auditing of firms' financial statements on industry-wide resource allocation. Using threshold-induced variation in the share of mandated firms in a given industry, I document that reporting mandates facilitate ownership dispersion in capital markets and spur competition in product markets. I, however, do not find that reporting mandates unambiguously improve the efficiency of industry-wide resource allocation. With respect to auditing mandates, I find only that they impose a fixed cost on firms, deterring smaller entrants.

Shotgun marriage between credit investors and companies to be tested amid recovery from pandemic.

Using a unique setting where stand-alone banks submit filings to bank regulators instead of to the SEC, we examine the consequences of fragmented securities regulation on disclosure compliance and information-processing costs. Consistent with the theory that bank regulators are less concerned about transparency than the SEC is, we find that bank regulators’ disclosure requirements are laxer, and stand-alone banks are more likely to violate filing deadlines.

We study the descriptiveness of the “unravelling” prediction in the 1890s streetcar industry. In this historical setting, capital-intensive streetcar companies gain the opportunity to disclose their earnings to dispersed investors via a new, quarterly newspaper supplement. We document that a quarter of the companies withhold their earnings from the first supplement, inconsistent with the “unravelling” prediction.