Publications
A Reconsideration of the Failure of Uncovered Interest Parity for the U.S. Dollar (with Charles Engel, Nan Xiang, and Mengqi Wang), Journal of International Economics, 136, May 2022, 1-35.
Presented at UMN-UW International/Macro Student Workshop 2021
Working Papers
Firm's Public Listing, Investment, and Financing in the Presence of Private Information (Job Market Paper)
Presented at UMN-UW International/Macro Student Workshop 2024
Abstract:
This paper studies the effects of disclosure regulation on firms' decisions to go public, invest, and raise external financing. Using a sample of IPO and similar private US firms, I find that firms going public increase investment and sales growth, borrow in longer maturity, and become more profitable relative to private firms. These results are amplified after disclosure tightening linked to the Sarbanes-Oxley Act of 2002. Motivated by these empirical findings, I develop a private information model where firms can go public subject to unobservable preference shocks. Both private and public firms have access to profitable investment opportunities that can be financed with either short- or long-term debt. I use the model to decompose the effects of changes in disclosure regulations on firm outcomes, distinguishing between intensive (treatment) and extensive (selection) margins. Tighter disclosure rules incentivize better-quality firms to go public, increase investment, and lengthen debt maturity. The model derives important policy implications: treatment and selection effects of disclosure tightening may produce opposing outcomes when adverse selection is more relevant.
Financial Disclosure and Firm Dynamics (with Dean Corbae)
(Draft is available upon request)
Presented at Midwest Macro Meetings Fall 2024, UW-Madison Finance Brownbag Spring 2022
Abstract:
How do differences in information structure (e.g. disclosure regulation) between private and public firms affect the cost of external finance and firm dynamics? Empirical studies find that public firms take on more leverage at lower cost relative to private firms. We provide a simple model with asymmetric information and moral hazard consistent with these facts. We use the model to disentangle the roles of informational frictions and analyze the effects of information disclosure on firm dynamics.