Published and Accepted Papers
with Morten Bennedsen and Daniel Wolfenzon
Journal of Financial Economics, Volume 133, Issue 3, September 2019, Pages 658-684
Abstract: We use detailed information on individual absent spells of all employees in 4,140
firms in Denmark to document large differences in average absenteeism across firms. Using employees
who switch firms, we decompose days absent into an individual component (e.g., motivation, work ethic)
and a firm component (e.g., incentives, corporate culture). We find the firm component explains 50%
to 60% of the difference in absenteeism across firms, with the individual component explaining the
rest. We present suggestive evidence of the mechanisms behind the firm effect with family firm status
and concentrated ownership strongly correlated with decreases in absenteeism. We also analyze the
firm characteristics that correlate with the individual effect and find that firms with stronger
career incentives attract lower-absenteeism employees.
with Vyacheslav Fos and Kai Li
The Review of Financial Studies, Volume 31, Issue 4, 1 April 2018, Pages 1499–1531
Abstract: Using a hand-collected sample of more than 30,000 directors nominated for election
over the period 2001–2010, we construct a novel measure of director proximity to elections— Closeness-to-election.
We find that the closer a director is to her next election, the higher is CEO turnover–performance
sensitivity. Each year closer to director elections is associated with a 23% increase in CEO turnover–performance
sensitivity. Three tests support a causal interpretation of the results. First, when we require directors
to have a minimum tenure of three years, there is no material change in the results, suggesting that
the timing of when directors join their boards is unlikely to drive the results. Second, we find
similar results when we use director Closeness-to-election on other boards as a measure of proximity
to elections. Third, when we restrict the analysis to firms with unitary boards, there is no material
change in the results, suggesting that director self-selection into firms with staggered boards does
not drive the results. Cross-sectional tests suggest that, when other governance mechanisms are in
place, CEO turnover–performance sensitivity is affected to a lesser extent by Closeness-to-election.
We conclude that director elections have important implications for corporate governance.
with Nikolaos Artavanis and Adair Morse
Quarterly Journal of Economics , May 2016 131 (2)
Winner of the Wharton School-WRDS Award for the Best Empirical Finance Paper, WFA 2013
Featured in The Wall Street Journal, The NY Times, The WashingtonPost, The Financial Times, The Economist
Free Exchange and Kathimerini
Abstract: We show that in semiformal economies, banks lend to tax-evading individuals based
on the bank's perception of the individual's true income. This observation leads to a novel approach
to estimate tax evasion using the adaptation of the private sector to the norms of semiformality.
We use bank microdata on household credit, and replicate the bank model of credit capacity decision
to infer the bank’s estimate of individuals’ true income. We estimate a lower bound of 28.2 billion
euros of unreported income for Greece. The foregone government revenues amount to 32% of the deficit
for 2009. Primary tax-evading industries are medicine, law, engineering, education, and media. We
provide evidence that tax evasion persists not because the tax authorities are unaware, but because
of a lack of paper trail and political willpower. Finally, we speak to the reproducibility and applicability
of our method in other semiformal settings.
Winner of the Trefftzs Award, WFA 2010
Journal of Finance Issue (70:2), 1 April 2015
Abstract: This paper provides causal evidence on the impact of succession taxes on firm investment
decisions and transfer of control. I exploit a 2002 policy change in Greece that substantially reduced
the tax on intra-family transfers of businesses and show that succession taxes lead to more than
a 40% decline in investment around family successions, slow sales growth, and depletion of cash reserves.
Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the
family. I conclude by discussing implications of my findings for firms in the United States and Europe.
with Vyacheslav Fos
Journal of Financial Economics 114 (2014), pp. 316-340
Abstract: This paper shows that proxy contests have a significant adverse effect on careers
of incumbent directors. Following a proxy contest, directors experience a significant decline in
number of directorships not only in the targeted company, but also in other non-targeted companies.
The results are established using the universe of all proxy contests during 1996-2010. To establish
that this effect of proxy contests is causal, we use within-firm variation in directors' exposure
to proxy contests and exploit the predetermined schedule of staggered boards that only allows a fraction
of directors to be nominated for election every year. We find that nominated directors relative to
non-nominated ones lose 45% more seats on other boards. We discuss that this pattern can be expected
if proxy contest mechanism imposes a significant career cost on incumbent directors.
Author of Chapter 7, Financial Development and the Credit Cycle in Greece, with Haliassos M, G Hardouvelis, and D Vayanos (2015). Prepared for an MIT Press volume on reforms in
Greece, edited by C Meghir, C Pissarides, D Vayanos and N Vettas.
with Elisabeth Kempf
2018 Financial Research Association (FRA) Best Paper Award
Partisan bias affects the decisions of financial analysts. Using a novel hand-collected dataset that links credit rating analysts to party affiliations from voter records, we show that analysts who are not affiliated with the President's party are more likely to downgrade firms. Our identification approach compares analysts with different party affiliations covering the same firm at the same point in time, ensuring that differences in the fundamentals of rated firms cannot explain the results. The effect is more pronounced in periods of high partisan conflict and for analysts who vote frequently. Our results suggest that partisan bias and political polarization create distortions in the cost of capital of U.S. firms.
On the program of FRA 2018, UNC/Duke Corporate Finance Conference 2019
Coverage: Bloomberg, Bloomberg Opinion, CNBC, VOX, Crain's Chicago Business, CBR Comic
with Morten Bennedsen, Elena Simintzi and Daniel Wolfenzon
Revise and Resubmit at The Journal of Finance
Abstract: We examine the effect of pay transparency on gender pay gap and firm outcomes. This paper exploits a 2006 legislation change in Denmark that requires firms to provide gender dis-aggregated wage statistics. Using detailed employee-employer administrative data and a difference-in-differences approach, we find that the law reduces the gender pay gap, primarily by slowing the wage growth for male employees. The gender pay gap declines by approximately two percentage points, or a 7% reduction relative to the pre-legislation mean. In addition, the wage transparency mandate causes a reduction in firm productivity and in the overall wage bill, leaving firm profitability unchanged.
with Nikolaos Artavanis, Daniel Paravisini, Claudia Robles-Garcia and Amit Seru
Abstract: This paper develops a new approach to identify and quantify different rationales for deposit withdrawals.
Exploiting variation in the cost of withdrawal induced by the
maturity expiration of time-deposits, the approach can distinguish between withdrawals
due to liquidity needs, exposure to fundamental uncertainty, or expectations about how
other depositors will behave. Using daily micro-data from a large Greek bank we show
that early deposit withdrawal probability quadruples in response to a policy uncertainty
shock that doubled the short-run CDS price of Greek sovereign bonds. About two-thirds
of this increase is driven by direct exposure to policy uncertainty with the remainder
due to changes in expectations of behavior of other depositors. We estimate depositors’
willingness to pay to avoid uncertainty to quantify the effects and find that depositors
would have had to be offered annualized returns exceeding 50% to prevent withdrawals
during high-uncertainty periods.
with Spyridon Lagaras and Jacopo Ponticelli
Abstract: Corrupt practices in the assignment of government contracts are largely diffused and
can generate misallocation of resources across firms. We study how disclosure of such practices affects
firm growth and labor reallocation. We exploit exogenous variation in the exposure of corrupt firms
using random municipality audits by a large anti-corruption government program in Brazil. Firms exposed
by the auditing program experience a decline in employment growth relative to their peers. We document
that young, less-educated workers that do not occupy a managerial position have higher probability
to leave the exposed firms. Released workers tend to reallocate to smaller firms in the same sector
and municipality. Our evidence indicates that the exposure of corrupt practices reduces misallocation
with Spyridon Lagaras
Abstract: The purpose of the paper is to examine the effect of founding family control on the
cost of bank debt. We examine the cost of accessing the syndicated market and we use the financial
crisis and the unexpected nature of Lehman Brother's collapse as a laboratory in order to tease out
the effect of family ownership. We find that the increase in loan spreads around the Lehman crisis
was by at least 24 basis points lower for family firms. Furthermore, the gap in spreads among family
and non-family firms becomes wider among firms that had pre-crisis relationships with lenders with
higher exposure to the shock. The evidence are consistent with family ownership lowering the cost
of accessing debt financing especially when lenders are constrained. We further investigate potential
channels that drive the effect of family ownership. We provide novel evidence that for 17% of the
family firms creditors impose explicit restrictions in private credit agreements that require the
founding family to maintain a minimum percentage of ownership or voting power. Thus creditors value
the presence of the family. Furthermore, the impact of family control on lowering the cost of bank
debt is higher when family CEOs run the firms and among firms with higher ex ante agency conflicts.