Primary interest: Financial Markets, Financial Institutions, Behavioral Finance, Social Finance

Secondary interest: Investment, Real Estates, ESG, Fixed Income, Empirical Asset Pricing

(P: Presenter; C: Presented by coauthor)

Job Market Paper

Peer Dismissal and Contagious Career Concerns

I find that mutual fund managers reduce risk-taking activity when their workplace peers are dismissed due to underperformance. Consistent with peer dismissal increasing the salience of employment risk, the effect is stronger for managers who underperform, who have stronger social ties with the dismissed peer, and following bear markets. I establish a causal relationship by exploiting state-level changes in non-compete laws, which increase career concerns for managers in treated states. Consistent with peer dismissal alleviating ill-motivated risk-taking behavior that can hurt fund performance, I find a stronger peer dismissal effect for agency-prone managers who face high incentives to take excessive risks. Their funds also experience a modest improvement in risk-adjusted performance during the year following peer dismissal. My findings suggest that peer dismissal serves as an incentive alignment mechanism between fund managers and mutual fund investors.


Working Papers

Confederate Memorials and the Housing Market, with T. Clifton Green, Russell Jame, and Jaeyeon Lee

We find that Black, Democrat, and college-educated homeowners are less likely to live on Confederate memorial streets. Moreover, houses on Confederate streets sell for 3% less. The Confederate effect does not spillover to adjacent houses, consistent with direct name rather than neighborhood effects. The price effect increases following attention-grabbing events that highlight racial underpinnings of Confederate symbols. Removing Confederate school names is associated with price increases for local houses. Aversion to houses on Confederate streets also holds in experimental settings where house attributes are otherwise identical. The findings suggest that social norms can have important consequences for real estate markets.

Social Connection and Financing Cost of Municipal Governments, with Jinoug Jeung

We investigate the effect of social connection on municipal finance. Municipal Bond Mutual Funds (MBMFs) allocate more capital to counties with stronger social connection, which in turn lowers the municipalities’ financing cost, measured by offering spreads. Consistent with familiarity-driven demand channel, the effects are focused on mutual funds with smaller institutional resources, and opaque bonds that face higher uncertainty; we find no effect for bank-qualified bonds which are rarely held by mutual funds. The results are not driven by fundamental risks, underwriter effects, or large counties with national-level awareness. Overall, we provide a new channel based on social connection that explains the cross-section of municipal bond prices.

Risk, Return, and Environmental and Social Ratings, with Sudheer Chava and Jeong-ho (John) Kim 

We analyze the risk and return characteristics across firms sorted by their environmental and social (ES) ratings. We document that ES ratings have no significant relationship with average stock returns or unconditional market risk. Stocks of firms with higher ES ratings do have significantly lower systematic downside risk, as measured by downside beta, relative downside beta, coskewness, and tail risk beta. However, the economic magnitude of such reduction in downside risk is small. Our results suggest that investors who derive non-pecuniary benefits from ES investing need not sacrifice financial performance.


Work in Progress

Mutual Fund Fiscal-Year End and Risk-Taking, with Jeffrey Busse and Yanbin Wu

Heterogeneity and Persistence in Performance of Portfolio Managers, with Ji-Woong Chung and Kyeongbae Kim