Research
Working Papers
Bundling and Exclusion in the Defined Contribution Plan Market
(Job market paper) Link
Abstract Employers work with recordkeepers to provide defined contribution plans for their employees. Yet access to high-quality plans remains unequal, particularly for employees at small firms. I show that this disparity is driven by a supply-side friction: recordkeepers exercise their market power by strategically excluding small employers through minimum revenue thresholds. Because most major recordkeepers are vertically integrated and bundle recordkeeping with their own investment products, exclusion enables them to raise recordkeeping fees and induce employers towards plans with more affiliated and expensive investment options. I build and estimate a structural model that quantifies the extent and consequences of exclusions. Counterfactual analyses show that policies designed to relax the exclusion, such as pooled employer plans (PEPs), can expand access to high-quality plans and improve participant welfare, although these gains can be mitigated by recordkeepers’ strategic adjustment of exclusions in equilibrium.
Human Capital, Competition and Mobility in the Managerial Labor Market
with John Barry and Noah Lyman
Abstract We estimate a search model of managerial careers to quantify the relative importance of human capital accumulation (both general and firm-specific), managerial bargaining power, and imperfect labor market competition in shaping compensation and mobility in the market for US corporate executives. The composition of human capital is career-dependent and varies widely across managers: over tenure, firm-specific capital is the greatest driver of wage growth, whereas over experience in the labor market, job search and competition dominate. Firm-specific capital can help explain the high rate of internal CEO hires and low observed cross-firm CEO mobility. We further show that labor market competition (relative to pure bargaining power) makes up the majority of realized CEO surplus capture, and that firm-specific human capital positively interacts with competition in determining CEOs’ shares of rents because it raises the match-specific quality between the firm and manager.
Selected presentations: NBER Economics of Executive Compensation, FIRS, MARC, ITAM Finance Conference, FMA, UNSW Corporate Finance
Information and Preferences in Shareholder Voting
with John Barry and James Pinnington
(Draft available upon request)
Abstract We develop a model of shareholder voting with incomplete information about proposal quality. Shareholders differ in ownership stake, private information precision, and unconditional preference towards proposals passing. Equilibrium voting makes the mapping between observed vote records and preferences ambiguous because of strategic voting (shareholders conditioning on information implied by others’ votes) and belief correlation (shared public signals about proposal quality). We estimate the model using voting records of large US mutual funds and find that blockholders’ observed support rates can differ considerably from preference-implied support rates, highlighting that investor preferences cannot be inferred directly from vote records.
Flows, Financing Decisions, and Institutional Ownership of the U.S. Equity Market
with Alon Brav and Dorothy Lund
Forthcoming at The Journal of Corporation Law
Abstract This Article analyzes the relationship between flows to institutional investment managers, corporate financing decisions, and institutional ownership of U.S. public equity. In so doing, it provides new evidence about the drivers of institutional investor growth in equity ownership over the past two decades. Contrary to conventional narrative, we find that equity capital flows into the “Big Three” investment managers have slowed in recent years, with substantial differences between each institution. We also present a framework to understand how fund characteristics and corporate actions such as stock buybacks and equity issuances combine to shape the evolution of institutional ownership, including that of the Big Three. Our evidence reveals why certain institutions win and lose in the contest for flows and implicates important legal conversations including the impact of stock buybacks, mergers between investment managers, and the governance risks presented by the rise of index investing.