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Welcome to my website!

I am a financial economist studying non-bank financial intermediation. My recent work focuses on delegated asset management, financial advice and angel investing.

Publications

[1] “The Globalization of Angel Investments: Evidence Across Countries”
with Josh Lerner, Antoinette Schoar and Karen Wilson
Journal of Financial Economics (2018)

Across 21 countries, angel funding generates a positive impact on firm growth, performance, survival, and follow-on fundraising.

[2] “Regulating Commission-Based Financial Advice: Evidence from a Natural Experiment” (September, 2021)
 Journal of Financial and Quantitative Analysis, forthcoming

Limitations on commissions paid to financial advisers reduce prices of financial products and stimulate investment. 

Working Papers

[3] “Paying for Beta: Leverage Demand and Asset Management Fees” (February, 2021)
with Steffen Hitzemann and Mingzhu Tai
Revise and Resubmit, Journal of Financial Economics

We examine how investor demand for leverage shapes asset management fees. We show that in the sample of the U.S. equity mutual funds: (1) fees increase in fund market beta precisely for beta larger than one; (2) this relation becomes stronger and high-beta funds experience larger inflows when leverage constraints tighten; and (3) low net alphas are especially common among high-beta funds. These results are consistent with a model in which asset managers compete for leveraged-constrained investors with heterogeneous risk aversion. The cost of leverage for investors in forms of additional fees equals 46-64 basis points per year. 

PRESENTATIONS: FIRS 2020, NFA 2021

[4] “Strategic Borrowing from Passive Investors: Implications for Security Lending and Price Efficiency” (August, 2021)
with Darius Palia
Revise and Resubmit, Journal of Financial Economics

We hypothesize that short-sellers strategically borrow shares from passive investors to reduce dynamic short-selling risks. This behavior drives up lending demand for stocks with high passive ownership, conditional on ownership by other investors. Consistent with our hypothesis, these stocks have better price efficiency, higher lending fees and higher short interest. They also exhibit lower risks of unexpected fee increases and loan recall, have longer loan durations, and attract better-informed short-sellers. These results are concentrated in hard-to-borrow stocks where short-sale constraints are likely to bind. Our findings suggest that passive investing relaxes short-sale constraints by making borrowing shares less risky. 

MEDIA: ETF.com
PRESENTATIONS: NYU Stern, UNC Kenan-Flagler, USC Marshall, IDC Summer Finance Conference 2019, Triple Crown Conference 2019, The CUHK International Finance Conference 2019, University of Oklahoma,  Washington University in St. Louis, University of Miami, USCD

[5] “Automation and Inequality in Wealth Management” (September, 2021)
with Michael Reher

We examine how access to automated wealth managers affects households’ investment in financial markets and welfare across the wealth distribution. Our setting features novel microdata from a major U.S. robo advisor and a quasi-experiment in which the advisor reduces its account minimum by 90%. Based on a difference-in-difference estimator, the reduction increases middle-class households’ participation by 110% but does not affect wealthier or poorer households. We rationalize this behavior with a life cycle model calibrated using portfolio-level data. Our calibration suggests that the reduction significantly raises middle-class households’ welfare, and 65% of this gain reflects improved diversification.

PRESENTATIONS: California Corporate Finance Conference 2019, CAFR FinTechWorkshop 2020, NY Fed Fintech Conference 2020, The Paris Conference on FinTech and Cryptofinance 2020, Toronto Fintech Conference 2020, Georgetown Fintech Seminar Series 2020, UT Dallas Fall Finance Conference 2021, FINRA/NORC Access and Impact Conference 2021, FMA 2021

[6] “Production Complementarities in Asset Management (October, 2021)”
with Lu Han and Galit Ben Naim

Incentive provision is expected to be a key driver of asset managers’ compensation, yet empirical evidence on performance-based pay has been limited and mixed. This paper delivers a novel perspective on managerial incentives by examining the role of production complementarities between managers and firms, and quantifying to what extent such complementarities are internalized into compensation. Production complementarities naturally arise in asset management because a firm can influence a manager’s expected productivity by teaming her up with the right skill set and by advertising her performance to investors. Different managers benefit from firm externalities differently, and hence face different trade-offs between their current monetary compensation and firm support. Using a unique registry-based dataset on the production and compensation of Israeli mutual fund managers, we find that managers working with more skilled teammates and receiving more advertising receive lower salary today in return for higher expected productivity. Such effects are stronger for more skilled and less visible managers. The results are consistent with the incentive provision theory for forward-looking agents in the presence of production complementarities.

PRESENTATIONS: University of Wisconsin-Madison