Published Papers

• Debt and Bargaining Outcomes: Evidence from U.S. Hospitals

-- Management Science, 2020, 66(5): 2083-2098

Using the healthcare industry as a novel laboratory, I study whether a firm's use of debt enhances its bargaining power during negotiations with non-financial stakeholders. I find that reimbursement rates negotiated between a hospital and insurers for two homogeneous procedures are higher when the hospital has more debt. This relation is stronger among hospitals with less bargaining power relative to insurers ex ante. I provide direct evidence that debt improves a firm's bargaining outcomes.

• Renewable Governance: Good for the Environment?
with Alexander Dyck, Karl Lins, Lukas Roth, and Hannes Wagner.

-- Journal of Accounting Research, 2023, 61(1): 279-327.

We conjecture that board renewal mechanisms—those substantive enough to renew the thinking of the board—are required before investors can address the mismatch between their preferences regarding environmental sustainability and what insiders at firms are actually doing. We identify the adoption of majority voting for directors and the introduction of a female director as two corporate governance mechanisms potentially strong enough to renew a board’s thinking on sustainability. Using a sample of 3,293 firms from 41 countries, along with quasi-exogenous shocks to board renewal mechanisms in Canada and France, we find that both board renewal mechanisms are associated with significantly higher future environmental performance. Further tests provide suggestive evidence that board renewal is more strongly associated with environmental performance in settings with better institutions and more motivated institutional investors. These results suggest the importance of board renewal for alignment of firm policies with investor preferences around the world.

• Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control
with Jonathan Cohn and Aazam Virani.

-- Forthcoming, Review of Corporate Finance Studies

We analyze shareholder activism by ``quasi-insiders'' - founders, former executives, and other individuals tangentially connected to a firm. These individuals seek control in their campaigns, use aggressive tactics, and target smaller, poorly-performing firms. Their campaigns are associated with positive announcement returns. Former CEOs who engage in campaigns often left the target under negative circumstances and launch their campaigns soon after departure. Our results suggest that insiders at the periphery of control may intervene in firms too small for traditional activists to target.

• Dominated ETFs
with David Brown and Scott Cederburg.

-- Forthcoming, Critical Finance Review

Within the growing market for exchange-traded funds (ETFs), we identify many dominated ETFs with returns that are highly correlated with those of cheaper, more liquid competitors. Both retail and institutional investors overallocate to dominated funds with non-index strategies. We estimate the aggregate excess fees paid by investors to dominated U.S. equity ETFs to be $4.7 billion from 2000 to 2018. This cost is growing over time as newly listed ETFs claim unique strategies despite high correlations with cheap, well-established index ETFs. Dominated ETFs survive and thrive even without advisor incentive misalignments, suggesting limitations on the potential benefits of expanding fiduciary standards.




Work in Progress

• Family-Controlled Firms and Environmental Sustainability: All Bite and No Bark
with Alexander Dyck, Karl Lins, Lukas Roth, and Hannes Wagner.

Families control a large swath of the world’s publicly traded firms. Do they take environmental performance seriously? We test this in a sample of 3,832 firms from 35 countries. Using carbon emissions as the sustainability metric, the performance of family-controlled firms is not worse, and in some settings is better, than that of widely held firms. Using environmental scores based on qualitative metrics, family firms perform significantly worse. Our paper provides a completely new interpretation of prior evidence that family control is negatively related to environmental performance. Family-controlled firms take carbon emissions seriously and manage this potentially existential risk well.

• The Role of Proxy Advisors and Large Passive Funds in Shareholder Voting: Lions or Lambs?
with Audra Boone and Stu Gillan.

Large passive mutual funds and proxy advisory firms have faced criticism both for being too powerful and not exercising diligence in proxy voting. We document that the "Big 3" passive fund families, Blackrock, State Street, and Vanguard, are increasingly likely to vote with management, and their support is paramount in approving controversial proposals. Meanwhile, mutual funds overall are less likely to vote according to ISS recommendations, and ISS recommendations are not predictive of controversial votes passing, especially post-financial-crisis. Our findings suggest that the Big 3 actively vote their proxies, and that ISS appears less influential over time.

• The Evolution of Healthcare and Corporate Finance

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.

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