Job Market Paper

-- Washington University 11th Annual Corporate Finance PhD Poster Session Finalist for Best Paper Award in Honor of Professor Stuart I. Greenbaum

-- Western Finance Association Cubist Systematic Strategies Ph.D. Candidate Award for Oustanding Research

This paper uses the health care industry as a novel laboratory in which to study a firm's strategic use of debt to enhance its bargaining power during negotiations with non-financial stakeholders. I show that reimbursement rates negotiated between a hospital and insurers for a specific procedure are higher when the hospital has more debt. In order to strengthen causality, I show that this effect is stronger when hospitals have less bargaining power relative to insurers ex ante. The contribution of this paper is to provide direct evidence that debt improves a firm's bargaining outcomes.

Non-Refereed Publications

This is a summary of the issues discussed and presented at the 2013 Investment Strategy Summit for the Norwegian Government Pension Fund Global. The emphasis of the summit was responsible investing with a special emphasis on ways to strengthen the Fund’s work on responsible investment. The summit brought together experts (both practitioners and academics) and discussed ethical issues, financial performance, and activist investors in the context of social, environmental, and governance concerns.

Working Papers

I give a brief summary of the institutional details of the U.S. healthcare sector with a special emphasis on healthcare finance. In addition to its large size, U.S. healthcare has four unique features that can be used to help answer corporate finance questions: segmented markets, variation in corporate type, extensive data requirements and recent consolidation. I explain how changes over the last 100 years have led to each of these features. Next, I delve deeper into bargaining between insurance companies and hospitals, Medicare pricing, and hospital capital structure decisions during 2008-2012. Finally, I conclude with a brief discussion on how the Affordable Care Act has contributed to these factors.

"Large Index Funds and the Financial Crisis: The Evolution of Mutual Fund Voting" with Audra Boone and Stu Gillan.

The mutual fund industry has progressed towards one with larger funds and a greater proportion of passively managed assets. Given these changes, and recent post-financial crisis regulation, we study the evolution in mutual fund voting on shareholder-sponsored governance proposals. We find bigger funds/fund families are increasingly likely to vote with management, while index funds are less likely to do the same. Consistent with a cost-benefit analysis, smaller and index funds are more likely to rely on proxy advisory firms, with this tendency decreasing over time. Voting in line with other members of the same mutual fund family is high and this consensus has increased, especially for index funds.

  • Insider Activism
  • with Aazam Virani.

    We show that inside shareholders use activist tactics to influence firm policies, which we term insider activism. We contrast insider activism with hedge fund activism and find that insider activists have larger stakes in the firm, employ more aggressive tactics, and are more likely to seek board representation or control. The targets of insider activism are smaller, have less institutional ownership, and spend more on R\&D than hedge fund targets. Insider activist campaigns are less successful than hedge fund activist campaigns in meeting their objectives, but they are associated with improvements in value and operating performance. Our analysis therefore suggests that insider activism is an effective governance mechanism that plays a distinct and complementary role.