Research Themes

Finance and Labor, Corporate Governance, Corporate Finance, Contract Theory, Financial Markets

Accepted and Published Papers

Firm Performance Pay as Insurance against Promotion Risk (Journal of Finance, 2024)

The prevalence of pay based on risky firm outcomes for non-executive workers presents a puzzling departure from conventional contract theory, which predicts insurance provision by the firm. When workers at the same firm compete against each other for promotions, the optimal contract features pay based on firm outcomes as insurance against promotion risk. The model’s predictions are consistent with many observed phenomena, such as performance-based vesting and overvaluation of equity pay by non-executive workers. It also generates novel predictions linking a firm's hierarchy to its workers' pay structure.

• Featured on the Harvard Law School Forum on Corporate Governance

Sustainable Investing and Market Governance (with Deeksha Gupta and Jan Starmans) (Journal of Financial Economics, 2026)

This paper examines how sustainable investing affects the governance role of financial markets. We show that stronger concerns about externalities among informed investors can reduce price informativeness about managerial effort to improve financial performance, increasing the cost of incentive provision. This mechanism creates an inherent link between firms' environmental and social (ES) and governance quality. We show that the agency costs of sustainable investing can have real effects on ES outcomes when firms can affect their externalities. 

• Featured on the Oxford Business Law Blog

Stock Buybacks, Speculative Trading, and Shareholder Welfare (Forthcoming, Journal of Financial and Quantitative Analysis)

This paper studies buybacks with two informed parties: a manager and an outside speculator. Buybacks introduce two countervailing forces. A competition effect reduces speculator profits when buybacks compete against speculative trades. A dispersion effect increases speculator profits: buying undervalued shares generates gains while buying overvalued shares generates losses, widening the dispersion in per-share value across states. Sufficiently informed buybacks benefit shareholders; uninformed buybacks harm them. These effects vary with shareholders' liquidity exposures. The desirability of informed buybacks depends on the prevalence of speculation. Authorization depends on ownership, governance, and market conditions. Shareholders might welcome informed buybacks—not merely tolerate them.

Working Papers

Production and Externalities: How Corporate Governance Shapes Social Costs (with Michael D. Wittry) (Revise & Resubmit, Management Science)

We study how corporate governance affects social costs, with a focus on a tension between mitigating managerial moral hazards and limiting negative externalities. We develop a parsimonious principal-agent model with negative production externalities, which predicts that when monitoring costs rise, firms substitute toward performance-based compensation, leading to socially costly production decisions. Using asset-level data from the U.S. coal industry, we find that ownership dispersion—the canonical proxy for rising monitoring costs—leads to an 11% increase in production and a 33% rise in safety violations. To establish causality, we exploit politically motivated coal divestment mandates that forced key monitoring institutions to exit, generating plausibly exogenous increases in monitoring costs. Consistent with our model, affected firms raised managerial bonus thresholds and experienced higher production and more safety violations. Our findings reveal how governance choices can inadvertently amplify social costs, with implications for sustainable investing and corporate governance design. 

• WRDS Best Paper Award at the Drexel Corporate Governance Conference (2024)

• Featured on Columbia Law School's CLS Blue Sky Blog

Encouraging Employee Engagement: The Role of Equity Pay 

This paper presents a principal-agent model of workplace engagement linking information and production. Engaged workers are more productive and better informed about the firm. Equity pay imposes income risk that correlates with firm performance. When workers value information that improves decision-making under uncertainty, they are motivated to exert productive effort that generates that information. This novel incentive mechanism suggests that—contrary to the conventional view—equity pay can motivate non-executive workers to exert productive effort, even in large firms with severe free-rider problems. The model also offers novel testable implications linking workers' financial planning to firm outcomes. 

The Economics of Financial and Operational Hedging: Insights from U.S. Power Plants (with Grant Ran Guo, Haohang Wu, and Dong Yan)

We study how firms adapt hedging policies to manage increased weather-related risks due to climate change. We introduce a parsimonious model of financial and operational hedging, and financing frictions. Financial hedging reduces the firm's exposure to weather risk, lowering the firm's subsequent incentive to hedge operationally. However, financial hedging also makes the firm's debt safer and reduces borrowing costs, mitigating the conventional debt overhang problem that typically discourages operational hedging investments. The two types of hedging policies are strategic complements when financing frictions are sufficiently severe; otherwise, they are substitutes. We test the model's predictions using the U.S. electric power industry as an empirical setting. We document a financial hedging overhang: firms that hedge via financial contracts subsequently engage in less operational hedging, such as maintaining gas inventories.

• Best Paper Award at the Xi'an Jiaotong-Liverpool University Conference (2025)

• Best Pitch Award at the FMA Asia/Pacific Conference (2025)

Who Sets the Price? The Vertical Origins of Uniform Pricing (with Leandro Sanz and Michael D. Wittry)

Retail prices in U.S. consumer markets are jointly produced by manufacturers and retailers, but we show that the systematic component of price-setting originates primarily upstream. Using manufacturer-product scanner data spanning approximately 5 billion UPC-store-month observations, we decompose retail price variation into manufacturer and retailer components. Manufacturer identity accounts for approximately 90 percent of the explained variation in price levels and 97 percent of the explained variation in price changes. Price dispersion is shaped by both layers of the chain, though manufacturers remain the largest source of explained variation. We show that pricing practices change after brand acquisitions: acquired UPCs converge toward the acquirer's incumbent pricing behavior when the acquirer already operates in the target's category, but diverge from the acquirer's broader pricing behavior in expansionary acquisitions. Private-label products, which compress the manufacturer-retailer information wedge, exhibit greater geographic dispersion and responsiveness to local conditions than national brands. Finally, consistent with a reduction in upstream information frictions, products sold by more AI-exposed manufacturers exhibit greater geographic dispersion, more frequent repricing, and lower prices after the introduction of scalable generative AI APIs, with stronger responsiveness to local conditions. The results indicate that retail pricing rigidities reflect upstream informational frictions that technology can relax, rather than immutable features of retail markets.

Works in Progress

How Do Firms Execute Open Market Repurchases: Evidence from Taiwan (with San-Lin Chung, Wen-Rang Liu, and Olga Obizhaeva)

Innovation and Pivots (with Vincent Maurin)

Dynamic Firm Life Cycle and Payout Policy (with Tina Oreski and Cedric Wu)

Inactive Projects

Public and Private Weather Information in the Orange Juice Market (with Thomas Gilbert)

A Model of Cyber Insurance (with Ryan Skorupski)