Credit Information in Earnings Calls
We develop a novel technique to extract credit-relevant information from the text of quarterly earnings calls. This information is not spanned by fundamental or market variables and forecasts future credit spread changes. One reason for such forecastability is that our text-based measure predicts future credit spread risk and firm profitability. More firm- and call-level complexity increase the forecasting power of our measure for spread changes. Out-of-sample portfolio tests show the information in our measure is valuable for investors.
Diversity by Design: The Role of Contact and Homophily in Determining Persistent Friendships
Organizations regularly divide members in ways that maximize diversity, yet it is unclear whether efforts to induce diversity are effective in producing lasting ties. In this paper, we explore the extent to which an organization can induce diverse networks in small groups versus large groups, and in the short term (while induced contact persists) and in the long term (after induced contact ends). We evaluate this in an incoming MBA cohort as they are assigned to 70-person sections and five-person learning teams, both intended to maximize diversity and facilitate diverse ties.
Does Growing up in Hard Economic Times Increase Compassion? The Case of Attitudes towards Immigration
How Do (Green) Innovators Respond to Climate Change Scenarios? Evidence from a Field Experiment
This paper aims to unpack the pro-social motivations of green innovators. In a field experiment inviting SBIR grantees to learn more about and apply to MIT Solve, we provide scientifically valid scenarios varying the time-frame and scale of human cost of climate change. Innovators' response in clicks and applications increases with both scale and immediacy treatments. Our structural model estimates a welfare discount rate of 0.76%, providing a measure of innovators' value of future generations, and an elasticity to lives lost of 0.23, implying diminishing marginal concern to human loss.
Local Growth Policy and Dynamic Misallocation
Many state and local governments incentivize new business creation. I analyze local growth policy in a setting where firm entry and expansion choices exhibit local complementarities, creating dynamic misallocation at the aggregate level. Optimal entry subsidies would speed the transition of Rust-belt workers to the South and Mountain West by an extra 10 million people by 2035, raising real incomes by 4%. Actual subsidies substantially worsen misallocation, lowering welfare by 3%, 6 times the size of the subsidies themselves.
Regional personality differences predict variation in COVID-19 infections and social distancing behavior
Reporting Regulation and Corporate Innovation
We investigate the impact of reporting regulation on corporate innovation. Exploiting thresholds in Europe’s regulation and a major enforcement reform in Germany, we find that forcing firms to publicly disclose their financial statements discourages innovative activities. Our evidence suggests that reporting regulation has significant real effects by imposing proprietary costs on innovative firms, which in turn diminish their incentives to innovate.