Corporate Finance, Political Economy, Labor Economics, Corporate Governance.
1. “Trading Credit (Subsidies) for Votes: The Effect of Local Politics on Small Business Lending” and accompanying Internet Appendix with Sahil Raina (Presented at Paris December Finance Meeting 2019, ASU Sonoran Winter Finance Conference 2020, Finance Down Under 2020; Accepted at FIRS 2020, Northeastern Finance Conference 2020, WFA 2020, EFA 2020)
Small businesses are championed by politicians seeking votes. We study how the competitiveness of congressional elections affects small business loan subsidies. To identify the causal impact of electoral competitiveness, we examine politically-motivated congressional redistricting (“gerrymandering”) and exploit the discontinuity in post-redistricting electoral competitiveness between districts where the redistricting party narrowly won and lost the pre-redistricting election. Using our novel regression discontinuity design, we find that districts with more vulnerable congressional representatives receive larger Small Business Administration (SBA) loan guarantees and lower interest rates on SBA loans. This increased lending is accompanied by higher rates of employment growth, particularly in the manufacturing sector, and greater concentrations of labor and capital in a smaller number of establishments. Overall, our findings indicate that local politics affect the allocation of government-subsidized credit, and that larger businesses and politically-important industries capture larger shares of the resulting gains.
2. “The Effects of Skilled Immigration Restrictions on Corporate Investment: Evidence from H-1B Visa Application Deadlines” (Based on an earlier project presented at SFS Cavalcade 2017, NFA 2017, AFA 2018)
I study how access to foreign skilled workers affects corporate investment. Restrictions on high-skilled immigration may induce firms to lower investment due to complementarity between skill and capital, and also to delay investment due to ex-ante uncertainty over the ability to hire. I exploit a temporal discontinuity in firms’ ability to apply for temporary work visas (“H-1B visas”) for prospective employees, and find that rationing of H-1B visas leads to lower investment in tangible capital. Using the historical distribution of immigrants throughout the United States to identify exposure to immigrant supply shocks, I further find that firms tend to periodically delay investment until annual uncertainty over H-1B hiring is resolved. Specifically, I find that firms located in more exposed regions periodically increase investment after the H-1B application deadline every year, but only in industries that are more dependent on H-1B workers.
3. “Politics and Hidden Borrowing: Electoral Cycles and State Defined Benefit Pension Plans” (Job Market Paper, Presented at WFA 2017, Awarded WFA Cubist Systematic Strategies Ph.D. Candidate Award)
I investigate how political incentives affect the policies of public-sector defined benefit (DB) pension plans in the United States. Incumbent Governors with discretion over state DB pension plan policies can borrow through the public pension system in a non-transparent manner by lowering contributions or raising benefits. In election year, the Governor faces the incentive to incur higher “pension deficits” in order to finance policies that improve his/her re-election chances. I document that such pension deficits are systematically higher in the final year of an election cycle, driven largely by election year decreases in governmental contributions. To formalize the intuition behind my findings, I present a stylized principal-agent model in which the key friction is temporary information asymmetry between incumbent politicians and voters regarding public pension policy. Consistent with the model’s predictions, the empirically documented electoral cycle pattern in pension deficits is stronger for pension plans that are more opaque and when gubernatorial elections are more closely contested. I also conduct falsification tests using private-sector DB pension plans in order to rule out alternative explanations for my findings.
Work in Progress
“Financializing the Fourth Estate: The Civic Effects of Private Equity Newspaper Ownership” (with Sahil Raina and Yusuke Tsujimoto)
“The Real Effects of Unfunded Public Pension Plan Liabilities“