CEO educational background and acquisition targets selection (With David Yin) Journal of Corporate Finance 52, 238-259, 2018.

Using hand-collected CEO education data of 3,574 CEOs over the period of 2000 to 2015, we document that CEOs are significantly more likely to acquire targets that are headquartered in those states where the CEOs received their undergraduate and graduate degrees. Education-state deals are larger, have higher completion rates, and exist with both public and private targets. Acquirers pay a lower target premium for education-state deals and the cumulative abnormal announcement returns are positive. The combined evidence suggests that education-state acquisitions are more likely to be driven by bidder CEO’s information advantage toward firms headquartered in the education state.

Working Papers

1. Firm reputation and the cost of bank debt (Job Market Paper) 

This paper examines whether firm reputation impacts borrowing costs and thus investment. Using unique data from Fortune’s Most Admired Companies surveys, I find that reputable borrowers enjoy lower borrowing costs and better loan contract terms. My identification strategy is based on propensity score matching, a regression discontinuity design, and clean reputation measures removing the impact of prior financial performance. Further evidence suggests that banks reward reputable firms with better contract terms because this reputation proxy contains incremental information on borrower future performance and credit risk. Last, firms increase capital expenditures and R&D after receiving the Most Admired designation, consistent with reputable firms exploiting their lower cost of capital and with reputation having real effects on firms’ investment policies.

  • American Finance Association Ph.D. Students Poster Session 

  • Financial Management Association Annual Meeting 

  • The University of Arizona (2019 Scheduled)

  • Southwestern Finance Association Annual Meeting (2019)

  • Eastern Finance Association Annual Meeting (2019)

2. Mergers, Product Prices, and Innovation: Evidence from the Pharmaceutical Industry​ (With Alice Bonaimé)

Using novel data from the pharmaceutical industry, we study the impact of mergers on product prices and innovation. Drug prices increase 2.7–5.6% more within acquiring pharmaceutical firms than matched control firms, and elevated prices persist up to two years. Exploiting cross-sectional heterogeneity in expected change in market power across deals and products, we find price increases are more pronounced for deals that consolidate market power more and absent for drugs already shielded from competition through patents and exclusivity rights. Yet, product lines shared by the bidder and target are not impacted more than non-overlapping product lines. Collectively, our findings are consistent with the effects of market power consolidation from mergers outweighing synergistic gains and suggest merged firms exercise market power by capitalizing on their larger scale. We find no evidence of mergers facilitating or incentivizing innovation—a potential tradeoff to higher product prices.

  • Midwest Finance Association (2020 Scheduled) 

  • American Finance Association (2020)

  • Virginia Tech University 

  • Center for Management Innovations in Healthcare (CMIH) 2019 Fall Research Grant 

  • The University of Arizona (2019)

  • The University of Exeter (2019)

  • The University of Bristol (2019)

3. Hiring retiring-age CEOs​ (With David Yin)

We document a stylized fact that more than 10% of S&P 1500 companies have hired a CEO who starts the job near or above the retirement age of 65 years old (Retiring CEOs). This phenomenon exists among all industries and persists over time. This finding is puzzling because conventional wisdom suggests that agency problems increase as a CEO approaches retirement. We find that firms are more likely to hire retiring CEOs when the CEO job risk is high and when the firm is in distress. These CEOs receive a lower total compensation and the compensation structure puts a higher weight on non-equity based compensation. Retiring CEOs perform better in distress and are significantly better at resolving distress. The specific actions through which retiring CEOs resolve distress include cutting operating expenses, increasing cash balance, reducing R&D expenditures, repurchase, and layoff workers. Finally, we show that retiring CEOs have a shorter tenure. Overall, evidence from this paper suggests that retiring CEOs can be beneficial to shareholders when they are hired for the right purpose.​

  • Southwestern Finance Association (2019)

  • Eastern Finance Association (2019)