Working Papers

Revise & Resubmit, Review of Financial Studies

This study empirically evaluates the relationship between health state-contingent assets and their ability to facilitate greater survival rates. Using transaction-level data from the life settlement market in a quasi-experimental setting, this study finds that wealth in particularly poor states of health leads to a significant increase in survival rates. This relationship is stronger for people in fragile health and those living furthest from hospitals. Improved survival rates are independent from the severity of the disease diagnoses and the social-economic status of the policyholders. These findings provide novel evidence in support of financial solutions aimed at the rising cost of healthcare.

Revise & Resubmit, Management Science

(Circulated under NBER Working Paper No. 26113)

We document the role that inside investment plays in managerial compensation and hedge fund performance. Merging against a comprehensive dataset of US hedge funds, we find that funds with greater inside investment outperform on a factor-adjusted basis. We emphasize the role of capacity constraints in explaining this result: insider funds are smaller, are less likely to accept inflows in response to positive returns, and are more likely to be closed to outside investors. These results suggest that managers earn outsize rents by operating trading strategies further from their capacity constraints when managing their own money.

Media Coverage: Harvard Law School Forum, Bloomberg View, Institutional Investor, ValueWalk, Reuters

- Recipient of the Moskowitz Price, Best Paper on Socially Responsible Investing

- Research Proposal Accepted by the Pacific Center for Asset Management (PCAM)

- Best Paper in Corporate Finance and Financial Institutions at the FMA European Conference, 2021

- European Investment Forum, Research Award for Best Paper, 2021

We study the real effects of environmental activist investing. Using plant-level data in a quasi-experimental setting, we find that firms targeted by environmental activist investors reduce their toxic releases, greenhouse-gas emissions, and cancer-causing pollution through preventative efforts. Improvements in air quality within a one-mile of targeted plants suggest potentially important externalities to local economies. We provide evidence supporting the external validity of environmental activism while also ruling out reporting biases, forms of selection, and other alternative hypotheses. Overall, our study suggests that engagements are an effective tool for long-term shareholders to address climate change risks.

Contradictory Voting by ESG Funds

This paper studies the conflict between ESG funds and their investors. Funds trade-off greater short-term financial performance against long-term sustainability. This conflict results in ESG funds voting against their stated pro-social mandate, even when supported by proxy advisors. Lower returns to sustainable proposals result in funds actively managing returns, while flow tests suggest that investors do not respond to contradictory voting. Simulating a correction to this voting pattern suggests an increase in passage of proposals, and greater sustainability disclosures. While investors delegate their pro-social preferences onto socially responsible funds, financial returns ultimately determine a funds' stance towards such issues.

The Impossibility of Communication Between Investors

All investors face the same decision problem: either invest for themselves or delegate their portfolio problem to an outside investor. Typically, asset managers can communicate their superior knowledge to attract capital. However, such communication comes with the risk of revealing the particulars of their valuable information without a commitment from potential investors. I explore this fundamental investment-delegate problem through developing an entropy-based model of communication, where investors endogenously determine to be a principal or an agent in a highly generalizable setting.

Works in Progress

Target Date Shortfalls