RESEARCH

Job Market Paper

FROM MANDATORY TO VOLUNTARY DISCLOSURES: CONFLICT MINERAL REPORTS OF US FIRMS

Although the SEC suspended the enforcement of conflict mineral disclosure in April 2017, some firms continue to file conflict mineral reports. I study the determinants of the voluntary disclosure of conflict mineral reports in this setting and the disclosure quality of these reports. I find that firms with more extensive media coverage and firms that are the target of activist campaigns, audited by Big 4 firms, owned by institutional investors, or with higher visibility tend to file conflict mineral reports voluntarily and to have conflict mineral reports with better disclosure quality. Additionally, firms with more extensive media coverage, that are targets of activist campaigns, owned by institutional investors, or have higher visibility tend to continue to file conflict mineral reports for more years after the regulatory change. Finally, in the period after the regulatory changes, firms that are the target of activist campaigns have better disclosure quality. Broadly, my study provides insights into firms' disclosure strategies under mandatory and voluntary regulatory regimes.

with Vedran Capkun and Pepa Kraft

COMMITMENT TO REGULATION AND DEMAND FOR CRYPTO TOKENS

This study analyzes how commitment to investor identification, such as know-your-customer policies (KYC), impacts investor demand for crypto tokens. We find that investor identity verification is associated with a larger number of buyers, more transactions, greater trading volume, higher liquidity, and lower bid-ask spreads. However, these results are limited to secondary trading; there is no difference between adopters and non-adopters of identity verification in primary trading at the initial coin offering (ICO). We also find that an increase in the regulation of crypto token issuance mitigates the negative impact of identity verification practices on demand for tokens. Finally, active and diversified investors are more likely to invest in tokens issued by firms that adopt investor identity verification.

with Vedran Capkun and Pepa Kraft

COLLEGE INFORMATION ENVIRONMENT AND STUDENT DEFAULT RATES

This paper examines the relationship between the quality of a college’s information environment and student loan default rates. We find that poor reporting quality is associated with higher default rates. Consistent with the result that the mechanism driving this finding is the relationship being academic success and earnings potential, we find that colleges with poor reporting quality have lower graduation rates and higher student debt to income ratios upon graduation. We further find that college advertising is associated with higher student loan default rates, and the effect becomes stronger when colleges exhibit low reporting quality, suggesting that prospective students rely more on advertising when reporting quality is low. Overall, our evidence confirms that poor reporting quality and high levels of advertising lead to inefficient investments in education.

with Vedran Capkun and Pepa Kraft and Xucheng Shi

TRUSTEES IN PUBLIC DEBT CONTRACTS AND TIMELINESS OF DEFAULTS

Prior to default, the underwriter of a firm’s bond issue or the firm’s creditor can serve as trustees. We examine whether this creates a conflict of interest, and how the trustee’s role as the firm’s underwriter or its creditor affects the probability of default and loss if the default occurs. We find that when the trustee is also the underwriter of a firm’s public debt issue the probability of default is higher and the loss from a default is lower. This finding is consistent with the argument that reputation concerns discipline trustees to detect and trigger default early. After the 1990 reform of the Trustee Indenture Act, which allowed for underwriters to act as trustees, the probability of default increased and loss from defaults decreased, which is consistent with the argument that reputation plays a role in trustee behavior. In contrast, when the trustee is also a firm’s creditor, we find that the probability of default is lower, suggesting that such trustees’ self-interested behavior decreases detection and delays default.