Working Papers

The Role of Bankers in the U.S. Syndicated Loan Market [Download]

I construct a novel dataset linking individual bankers to large borrowers in the U.S. syndicated loan market to analyze the impact of bankers on bank lending. Bankers have a significant impact on lending. Banker fixed effects explain a sizeable fraction of the observed variation in various loan terms. Banker fixed effects have about one and a half times as much explanatory power as bank fixed effects across all variables. One channel through which bankers impact lending is through personal relationships with borrowers. I address the endogenous nature of relationship formation by exploiting shocks to relationships from the departure of bankers and find that stronger personal relationships are associated with significantly lower interest rates charged to clients. Reduced interest rates of relationship loans reflect superior information of bankers, rather than nepotism. Loans issued by bankers that have stronger personal relationships with borrowers are associated with fewer bankruptcies

Conferences presented: SFS Cavalcade 2017, 2017 Telfer Annual Conference on Accounting and Finance, Colorado Finance Summit (Job Market Session) , SFI Workshop in Finance 2016, DGF 2016, FMA 2016 (PhD Session), NFA 2016 (PhD Session), Federal Reserve Board of Governors, Emory University (Goizueta), University of Rochester (Simon), University of British Columbia (Sauder), Georgetown University (McDonough), McGill University (Desautels), University of Toronto (Rotman), Penn State (Smeal), Bocconi, INSEAD, University of New South Wales, Arizona State (Carey), Michigan State (Broad), Carnegie Mellon (Tepper)

Do Courts Matter for Firm Value? Evidence from the U.S. Court System [Download]

with Stefano Colonnello

We estimate the link between the court system and firm value by exploiting a U.S. Supreme Court ruling which changed firms' exposure to different courts. We find that exposure to courts which are highly ranked by the U.S. Chamber of Commerce increases firm value. The effect is driven by courts' attitude towards businesses more than by their efficiency and is more pronounced for firms in industries with high litigation risk. We also test whether firms benefit from the ability to steer lawsuits into friendly courts, so-called forum shopping. We provide evidence that a reduction in firms' ability to forum shop decreases firm value, whereas a reduction in plaintiffs' ability to forum shop increases firm value.

Conferences presented: SFS Cavalcade 2016, DGF 2016, NFA 2016, ALEA 2016, EFMA 2016

How Do Investors and Firms React to an Unexpected Currency Appreciation Shock? [Download]

with Matthias Efing, Rüdiger Fahlenbrach and Philipp Krüger

We examine the impact of a sudden home currency appreciation on the valuation and behavior of corporations in a developed economy. The Swiss National Bank surprisingly repealed the minimum exchange rate of 1.2 Swiss francs per Euro on January 15, 2015. On that day the franc appreciated by 15% and the main stock market index dropped by 8.7%. The impact was largest for export oriented firms with high domestic costs. These firms experienced 5% lower announcement returns, subsequently faced economically sizeable reductions in sales and profitability, and responded by reducing investment by 8.1% while only slightly reducing employment.

Conferences presented: FMA 2016, SGF 2016, DGF 2016

The Causal Impact of Distance on Bank Lending [Download]

with Cornelius Schmidt and Aksel Mjøs

We exploit exogenous shocks to the distance between corporate borrowers and banks to analyze the role of distance in commercial bank lending. We find that a reduction in travel time due to improved infrastructure increases the likelihood of initiating a new borrowing relationship, evidence that lower distance creates a surplus from lower transaction costs. In existing lending relationships, however, banks capture a fraction of this surplus by increasing interest rates. Larger changes in distance are associated with stronger effects and banks with higher market power capture a larger fraction of the surplus.

Conferences presented: EFA 2016, DGF 2015

Work in Progress

Gaming the Legal System: The Finance Aspects of Forum Shopping

with Stefano Colonnello

Make or Buy in FDI? Strategic Interactions and the Choice Between M&A and Greenfield Investments

with Erik Hapnes and Semyon Malamud

The Real Effects of Banker Networks

with Marc Frattaroli

Conferences presented: NYU Stern Corporate Governance Luncheon

Covenant Specialization

with Rustam Abuzov and Roberto Steri