Shot of Corridor in Working Data Center Full of Rack Servers and Supercomputers with High

Research

Research Interests

Financial Accounting: Credit Markets, Restructuring, Insolvency and Distress; Machine Learning, AI, Big Data and Alternative Sources of Information; Investment.

Working Papers

[1] Beyond the Twilight Zone: The Restructuring and Resurrection of Zombie Firms [SSRN]

(with Philip Berger)

Zombie firms—those whose operating profits persistently fail to cover debt servicing costs—crowd out healthy competitors, yet their survival mechanisms remain understudied. Using financial statement analysis and FinBERT-based textual analysis of corporate disclosures, we examine their restructuring activities. We find that operational restructuring, not financial restructuring alone, drives zombie firm recovery and leads to superior efficiency. Our findings extend the accounting literature on corporate disclosure and offer insights for managers, regulators, and policymakers.

[2] Creditor Rights and Related-Party Transactions: Evidence from the Implementation of the Insolvency Reforms in India
(with Ole-Kristian Hope and Dushyant Vyas) [SSRN]

Revise and Resubmit (3rd Round at the Accounting Review)
Using the enactment of the Insolvency and Bankruptcy Code (IBC) in 2016 as a quasi-experiment, we investigate whether enhanced creditor rights affect RPT levels for firms in India. We find that firms with greater reliance on unsecured credit (treatment firms) reduce their reliance on RPTs following the implementation of IBC.

[3] Out-of-Court Public Debt Restructuring and Debtholder-focused Investor Communication
(with Stacey Choy and Dushyant Vyas) [SSRN]

Successfully conducting public debt out-of-court restructuring (OCR) requires near unanimous consent from dispersed bondholders. We predict and find that targeted investor communication by issuers is pivotal in alleviating information frictions between issuers and bondholders, thereby fostering consensus for successful OCR. Specifically, we find that debtholder-focused investor communication activities (Debt IC) are positively associated with the likelihood of OCR over costly Chapter 11 bankruptcy, while generic financial reporting information or shareholder-targeted communication has no such effect. Subsample analyses suggest that Debt IC is particularly effective when bondholders face challenges in assessing expected recovery rates or when issuers regularly engage in Debt IC, suggesting its role in conveying valuable forward-looking information and building relationships among bondholders. Additionally, we find that Debt IC helps reduce coordination frictions among dispersed debtholders. Overall, our findings highlight the unique role of Debt IC in enhancing the likelihood and effectiveness of public debt OCR for financially distressed firms.

[4] Voluntary or Forced CEO Turnover? Asymmetric Information, Disclosure Strategies, and Market Reactions
(with Kose John, Xu Tian, and Haofei Zhang)

Abstract: Using a hand-collected sample of 1419 CEO turnover announcements gathered from Factiva News, we study the market reaction to CEO turnover announcements in the presence of information frictions. Our results suggest that firms act strategically when disclosing information about CEO turnover to avoid a negative market reaction.

Research: Publications

[5] Artificially Intelligent or Artificially Inflated? Determinants and Informativeness of Corporate AI Disclosures
(with John M. Barrios, John L. Campbell, and Ryan G. Johnson)

Abstract: Using textual analysis and AI employment data from 2016-2023, we examine firms' AI disclosures and investments. Firms with higher R&D and analyst coverage in AI-intensive industries are more likely to make AI disclosures. While AI disclosures are associated with improved operational efficiency and reduced dividends, firms suspected of "AI washing" - those with high AI disclosure but low AI employment - do not realize these benefits. These AI washers tend to be smaller firms with lower R&D and external monitoring. Firms with substantial AI employment significantly outperform suspected AI washers in long-term returns. Our findings offer crucial insights for investors and regulators seeking to distinguish between genuine AI adoption and potentially overstated AI capabilities.

[6] Value Relevance of Corporate Consumer Data: Evidence from Website Cookies (with Junhao Liu and Jennifer Tucker)

Abstract: We examine how Big Data, specifically website cookies and traffic data, relate to firm value and performance. We find that the volume of cookie-collected data positively associates with stock value beyond traditional accounting measures, and with common Wall Street valuation multiples. The data volume also predicts current and future financial performance, while being negatively associated with SG&A expenses and unrelated to recognized intangible assets. These findings contribute to discussions about accounting for intangibles in the digital economy.

Other Publications

An Empirical Study of the Impact of Demographics on Growth and Inflation in Japan (Link)

(with Niklas Westlius, IMF Working Paper 16/237, December 2016; Journal of International Commerce, Economics and Policy, Volume 08, Issue 02, June 2017)
Abstract: Is Japan’s aging and, more recently, declining population hampering growth and reflation efforts? Exploiting demographic and economic variation in prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on total factor productivity. Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on total factor productivity and deflationary pressures.

Advancing financial inclusion in Micronesia (Link)

(IMF 2016 Article IV Consultation, Republic of Timor-Leste, IMF Country Report. No. 16/183)

Abstract: Financial inclusion appears more conducive to economic growth at an early stage. Higher financial inclusion impacts financial stability, enabling banks to build solid liquidity buffers, especially during periods of stress, while indirectly boosting firms’ resilience. This box analyzes the position of Micronesia on macro-finance and provides policy advice to the country authority.

Transition to Sustainable Development Goals (Link)