Publications
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Abstract
We find that rivals of both acquirers and targets experience an increase in their cost of bank loans following a vertical merger. We observe this increase whether or not the merger is part of an industry merger wave, mitigating concerns that our findings are driven by unobserved industry factors. While vertical mergers can foreclose input/output markets for rivals, they can also create efficiencies for the merging firms by reducing the holdup problem in relationship-specific investments. Utilizing asset specificity measures to assess the severity of the holdup problem, we find evidence that the cost of debt increases for rivals when vertical mergers are motivated more likely by foreclosure motives rather than efficiency motives.
Presented at
FMA Annual Meeting, October 2021, Denver, CO
Southwestern Finance Association (SWFA) Annual Meeting, March 2022
Florida International University, April 2022
Southern Finance Association (SFA) Annual Meeting, November 2022
Abstract
Prior studies of the relevance of long-term capital gains for stock prices rely on the evidence from the 1997 tax cut in the U.S. The primary component the tax-sensitive ownership in these studies is individual ownership, which is around 66.5%, on average. The sharp increase in institutional ownership since that time and the concomitant decline in individual ownership raises the question of whether long-term capital gains taxes are still relevant for stock prices. We examine the stock price response to the 2018 increase in the long-term capital gains tax rate in India, a market where individual stock ownership is only around 18.5%. Overall, the evidence provides strong support for the continued relevance of long-term capital gains taxes for stock prices despite individual investors accounting for only a small portion of the stock ownership.
Submitted version (available at SSRN)
Presented at
Southern Finance Association (SFA) Annual Meeting, 2020
Southwestern Finance Association (SWFA) Annual Meeting, 2020
Working Papers
Forecast Bias in Analysts’ Initial Coverage: The Influence of Firm ESG Disclosures. (Under Review)
Abstract
This study examines analyst forecast bias during the initial coverage of a firm using a comprehensive sample of analyst forecasts from 2007 to 2022. We find that analysts’ initial EPS forecasts are more conservative than ongoing coverage forecasts. Our results suggest that ESG considerations influence analysts’ initial assessments of the firm. Higher ESG disclosure scores attenuate conservative EPS forecast bias, particularly for analysts with a more favorable assessment of the firms than the consensus. We observe this effect when EPS forecast dispersion is high, indicating that ESG disclosures influence analysts’ initial assessments when uncertainty and disagreement among analysts are high. Our findings are robust to restricting the sample to small brokerage firms where analyst coverage assignments are more likely to be exogenous. We also find that analysts issue more optimistic price target estimates for firms with higher ESG disclosure scores.
Do General Partner Incentives Impact the Duration of Private Equity Funds?
Abstract
Using private equity fund data for 2,855 funds initiated in the period 2000-2012, we ask how general partner (GP) incentives impact the duration of a fund. Consistent with the premise that GPs maximize the lifetime revenue of their firm, i.e., both fees from the current fund and expected future funds, we find that a fund's duration is shorter when GPs raise a follow-on fund, even when distributed capital is below 100%. Funds with very long durations (Zombie Funds) are more likely when incentives are misaligned- smaller funds with low distributed capital and low expectations of raising future funds.
O Costco, Where Art Thou Going? A Firm’s Intra-city Relocation Effects on House Prices
Abstract