Research Interests
Corporate finance: corporate governance, executive compensation, information asymmetry and investment decisions, mergers and acquisitions
Behavioral finance
For publications, links lead to final published version in journal. For working papers, links lead to SSRN which is always updated with latest version.
Published and Accepted Papers
Sports Sentiment and Stock Returns (with Diego García and Øyvind Norli) (slides, see bottom of page for press coverage)
Journal of Finance 62(4), 1967-1998
Finalist, Smith-Breeden Prize for Best Paper in the Journal of Finance. Best Paper Award, Caesarea Center 3rd Annual Conference
Investor mood affects asset prices. Soccer World Cup elimination leads to a next-day abnormal return of -49bp on the national index.
Is CEO Pay Really Inefficient? A Survey of New Optimal Contracting Theories (with Xavier Gabaix)
European Financial Management 15(3), 486-496
Survey paper on recent theories arguing that executive compensation is efficient. A response to the Bebchuk-Fried critique that CEOs are stealing from shareholders.
Blockholder Trading, Market Efficiency, and Managerial Myopia (web appendix, slides, Harvard Law School summary)
Journal of Finance, forthcoming
Blockholders can exert governance even if they cannot intervene. By trading, they impound information
about long-run value into prices, attenuating myopia.
A Multiplicative Model of Optimal CEO Incentives in Market Equilibrium (with Xavier Gabaix and Augustin Landier) (web appendix, data on CEO incentives, slides, Harvard Law School summary)
Review of Financial Studies, forthcoming
Neoclassical model of both total salary and optimal cash/shares mix. Quantitatively explains negative empirical scaling of incentives with firm size.
Working Papers
UPDATED: Short-Term Termination Without Deterring Long-Term Investment: A Theory of Debt (Not Dividends) (slides)
Managers voluntarily take on debt as it concentrates investors' stakes, inducing monitoring. Rather than automatically terminating a loss-making manager, they find out if losses instead result from investment.
NEW: Dynamic Incentive Accounts (with Xavier Gabaix, Tomasz Sadzik and Yuliy Sannikov) (web appendix, slides)
Dynamic model of CEO pay featuring manipulation and private saving. Proposes a reform of CEO compensation to address problems that led to the financial crisis.
Press release, Knowledge@Wharton article, VoxEU, Fox Business Network TV interview, Wall Street Journal, Reuters, NPR radio interview
Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices (summary, slides)
Moskowitz Prize for Best Paper in Socially Responsible Investing, 2007 (audio of talk)
Knowledge@Wharton, UBS Equity Research, Money Message radio, BBC radio, Time, Kiplinger, Smart Money, Harvard Business, Daily Telegraph
Fortune's "Best Companies to Work For" outperformed by 4%/year from 1984-2005.
Employee satisfaction is associated with higher stock returns, rather than being wasteful expenditure.
Do Investment Banks Have Skill? Performance Persistence of M&A Advisors (with Jack Bao) (slides)
Wall Street Journal, Economist, New York Times, Knowledge@Wharton
M&A returns are positively related to an advisor's past returns and negatively related to its market share. But clients ignore past performance and select on market share
Tractability and Detail-Neutrality in Incentive Contracting (with Xavier Gabaix)
(web appendix, slides)
NYU Glucksman Prize for Best Working Paper in Finance, 2008/9 (First Place)
Extends tractable contracts of Holmstrom and Milgrom (1987) to settings that do not require exponential utility, Gaussian noise or continuous time
Takeover Activity and Target Valuations: Feedback Loops in Financial Markets (with Itay Goldstein and Wei Jiang) (slides)
Low valuations attract takeovers, but market expectations of takeovers boost valuations, potentially deterring efficient disciplinary takeovers from occurring
Governance Through Exit and Voice: A Theory of Multiple Blockholders (with Gustavo Manso)
(web appendix, slides)
Model justifying prevalence of multiple blockholders in reality. MBs trade aggressively when "voting with their feet," inducing greater managerial effort ex ante
Inside Debt (slides)
McGraw-Hill/Irwin Best Paper in Corporate Finance Award, 2006 FMA Meetings
Optimal executive compensation involves debt, rationalizing the widespread use of defined benefit pensions. But manager's debt/equity mix need not equal the firm's
Selected Academic Awards
| 2009 | Distinguished Referee Award, Review of Financial Studies |
| 2008 | NYU Glucksman Prize for Best Working Paper in Finance (First Place) |
| 2008, 2009 | Finalist, Helen Kardon Moss Anvil Award for best MBA professor |
| 2008, 2009 | MBA Core Curriculum Award |
| 2008, 2009 | MBA Core Teaching Award |
| 2007-2009 | Goldman Sachs & Co. Research Fellowship |
| 2007 | Finalist, Smith-Breeden Award for Best Paper in the Journal of Finance |
| 2007 | Moskowitz Prize for Best Paper in Socially Responsible Investing |
| 2006 | Best Paper in Corporate Finance Award, Financial Management Association meetings |
| 2006 | Best Paper Award, 3rd Caesarea Center Annual Conference |
2003 |
UK/US Fulbright Scholarship |
2001 |
Highest Double First in Economics and Management, Oxford University |
Other Publications
“Bond Valuation”, Chapter 4 in “The Money Market”, McGraw-Hill
“Financial Options”, Chapter 17 in “The Money Market” (with Jack Bao)
Selected Press Coverage (Sports Sentiment and Stock Returns)
TV interviews: CNBC, ESPN, ROBtv
Radio interviews: BBC Five Live, BBC World Service, BBC Radio 2, MarketWatch
Newspaper coverage in Financial Times 1 , FT 2 , Wall Street Journal 1 , WSJ 2 , WSJ 3 , Bloomberg , Washington Post, Boston Globe , Institutional Investor, Nature, MarketWatch 1, MarketWatch 2, Newsweek , The Times (UK), The Observer (UK), Le Monde (France), La Tribune (France), Les Echos (France), Frankfurter Allgemeine Zeitung (Germany), Der Speigel (Germany), Die Zeit (Germany), and over 30 other countries.
Non-technical summary for a generalist audience.
General Interviews on CEO Compensation
Kiplinger: Taming Executive Pay Will Be Up To Shareholders, 6/3/09
KGO radio (part of ABC networks), 3/18/09
General Interviews on Role of Behavioral Finance / Investor Sentiment in the Current Crisis
New York Times: Wall Street and the Fear Factor, 1/6/09
Newsweek: The Anatomy of Fear, 10/11/08
Philadelphia Inquirer: Economic Turmoil is Real, and it Feeds Fear Among Us, 10/5/08
Investment Dealers' Digest: Nothing to Fear, 1/5/09
General Interviews on Mergers and Acquisitions
Wall Street Journal: Genentech Shareholders May Hold Advantage In Roche Tender, 2/4/09
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