1. Depositors Disciplining Banks: The Impact of Scandals

Job Market Paper

Do depositors react to negative non-financial information about their banks? By using branch level data for the U.S., I show that banks, that financed the highly controversial Dakota Access Pipeline, experienced significant decreases in deposit growth, especially in branches located closest to the pipeline. These effects were greater for branches located in environmentally or socially conscious counties and data suggests that savings banks were among the main beneficiaries of this depositor movement. Using a global hand-collected dataset on tax evasion, corruption and environmental scandals related to banks, I show that negative deposit growth as a reaction to scandals is a more widespread phenomenon.

Media – 1) Financial Times 2) Chicago Booth ProMarket 3) VoxEU 4) Tax Justice Network 5) BankTrack 6) BankTrack Newsletter 7) S&P Global 8) 20Min

Videos – 1) Federal Reserve Bank of St. Louis  2) European Commission

Paper – 1) Stigler Center Working Paper Series 2) SSRN

Conference and Seminar Presentations – 2019 ASSA, European Commission Conference on Promoting Sustainable Finance (Belgium), 2019 Chicago Financial Institutions Conference (US), Southwestern Finance Association 2019 Conference (US), Chicago Booth Economics of Social Sector Organizations Conference (US), SAFE conference on Sustainable Architecture for Finance (Germany), Geneva Summit on Sustainable Finance (Switzerland), The Federal Reserve’s sixth annual Community Banking in the 21st Century research and policy conference (US), PRI Academic Network Conference (US), Inaugural Conference, Global Research Alliance for Sustainable Finance and Investment (the Netherlands), Chicago Booth Stigler Center Political Economy of Finance 2018 (US), 2019 AFA Atlanta Poster Session (US), 25th Global Finance Conference (France), European Financial Management Association 2018 Annual Meeting (Italy), 5th Sussex Young Finance Scholars Conference (UK), Cass Research Days (UK), 6th International Symposium on Environment & Energy  Finance Issues  (France), the 35th Annual Conference of the French Finance Association  (France), ETHOS (UK), the Wharton School (US), MIDAs (US), Cass Business School (UK) and Tilburg University (the Netherlands)

2. Catering through transparency: Voluntary ESG disclosure by asset managers and fund flows

With Marco Ceccarelli (University of Zurich and Swiss Finance Institute) and Simon Glossner (University of Virginia – Darden School of Business)

Our paper finds that, by using a standardized disclosure framework, clients are able to identify investors with higher levels of ESG integration, thereby alleviating informational asymmetries within the responsible investment landscape. We show this by examining institutional investor’s voluntary disclosure about their ESG practices. After joining the Principles for Responsible Investing (PRI), the world’s largest responsible investment network, investors are obliged to file an annual ESG report, which is assessed and scored by the PRI. Clients allocate more assets toward institutions that receive higher scores on the reporting framework. This effect is particularly strong when the voluntary disclosure is confirmed by ESG ratings verified by Morningstar.

3. COVID-19 in emerging markets: firm-survey evidence

       with Thorsten Beck (City’s Business School) and Burton Flynn (City’s Business School)

Using survey responses across nearly 500 listed firms in 10 emerging markets from early April, we find the vast majority of firms were negatively affected by COVID-19. Firms reacted by reducing investment rather than payroll. There is a surprising degree of support vis-à-vis employees, customers, other stakeholders and broader society. Although stock prices initially reacted to the impact of the crisis, delayed stock price reactions suggest evidence of inefficient markets. Furthermore, we find evidence that stakeholder-centric firms experienced lower stock price declines during the crisis drawdown.

Paper – CEPR COVID Economics

4. Universal Corporate Governance

       with Hao Liang (Singapore Management University)

A widely accepted principle in finance is that good corporate governance is associated with higher firm value. However, what is “good governance” and whether the same set of good governance practices can be universally adopted are fiercely debated. In this paper, we construct various measures of firm- and country-level corporate governance, including a “global entrenchment index”. We then test their relation with firm value on a large sample of more than 20,000 firms across 47 countries. We find substantial heterogeneity in the relation between some governance practices—especially those related to corporate rules constraining insider entrenchment—and firm value across countries, which is contingent on firms’ ownership structure and institutional environments. In contrast, higher institutional ownership is unconditionally correlated with higher firm valuation. Our results cast doubt on the universality of rule-based corporate governance practices.

Paper – 1) ECGI 2) SSRN

Conference and Seminar Presentations – GCGC Conference (South Korea), Nankai University (China), International Corporate Governance Society Annual Conference (China, UK), Cass Business School (UK) and SMU (Singapore).

5. Tax Avoidance Opportunities and Labor

with Peter Brok (Copenhagen Business School) 

Do companies change their business activity as a result of tax avoidance opportunities? By exploiting a regulatory shock to opportunities for tax avoidance that differentially affected parent-subsidiary pairs within and across countries, we find that firms increase their labor input in their treated subsidiaries. In addition, non-treated subsidiaries from the treated parent companies increase their employment as well suggesting a positive spill-over effect stemming from increased tax avoidance opportunities. Our results show that multinationals increase their real overall firm level employment, but our extended analyses suggest that domestic firms reacted by decreasing their employment, thereby questioning the long-run employment benefits of this event.

Conference and Seminar Presentations – 43rd Annual Congress of the European Accounting Association (Romania), Cass Business School (UK) and ETHOS (UK).

6. How Institutional Investors’ Collective Engagement on ESG Issues Create Value for Investors and Corporations

with Jean-Pascal Gond (Cass Business School), Rieneke Slager (Nottingham University), Michael Viehs (Hermes), Niamh O’Sullivan (Nottingham University) and in cooperation with the UNPRI. Additional Material – 1) RI Quarterly 2) UNPRI 3) Cass News