Research

We study the economic consequences of managers' vocal delivery quality during earnings conference calls. We introduce a novel measure, vocal delivery quality, that captures the acoustic comprehensibility of audio information for an average listener. Our measure relies on a deep-learning algorithm applied to a large sample of earnings call audio files. Consistent with predictions from the psychology and accounting literatures, we find evidence that the quality of managers' vocal delivery deteriorates when they deliver negative news, such as a decrease in earnings or negative narrative information, and positive but transitory earnings news. We show that the stock market reacts in real time to managers' vocal delivery quality. We also document that the vocal delivery quality has an effect on information intermediaries such as analysts and the media. Overall, our findings underscore the role of vocal dimensions in corporate oral disclosures.

I study whether disclosure mandates alter the equilibrium of cyberattacks by unintentionally informing cybercriminals. The California Consumer Privacy Act (CCPA) requires companies to disclose their personal information collection practices to consumers, inadvertently informing cybercriminals about the potential benefits of breaching each firm. Using a difference-in-differences design, I find that firms disclosing the collection of valuable personal data face an increased probability of data breaches. These firms also strengthen their cyberdefenses, both in terms of software and employee cybersecurity expertise. Firms trade off cybersecurity costs against the risk of data breaches, with the increase in breach probabilities more pronounced among firms that invest less in cybersecurity. Finally, I find that firms voluntarily disclose more about their cyberdefense and adjust their data-collection policies as additional defense strategies. Overall, this study highlights the trade-off between transparency and cybersecurity risks in today's economy.

We show a novel mechanism by which mutual fund managers strategically alter their portfolios to take advantage of investors' reliance on Morningstar star ratings. Specifically, funds achieve higher ratings by changing their holdings to induce Morningstar to reclassify them into size-value style boxes with lower average performance, thereby enabling more favorable peer comparisons. This practice, which we term 'box jumping,' attracts fund flows and higher fees, despite sacrificing return performance with rating upgrades reversing within three years on average. These patterns emerge after 2002 when Morningstar ratings began to be based on relative performance within style boxes, and are predictably absent beforehand. We also show that pervasive box jumping creates negative spillover effects on other funds. Together, our findings highlight portfolio recomposition as a novel strategic lever that funds use to manipulate Morningstar ratings.

Business software is becoming ubiquitous, but little is understood about adoption decisions or the implications for displaced professionals. To address this, we study the interaction between business software adoption and labor market conditions. We first show that adoption is increasing in business and financial operations worker wages. We confirm this finding in a Bartik-style estimation that studies accounting software adoption by private firms and exploits the passage of the Sarbanes-Oxley Act and states’ differences in pre-Act exposure to public company accounting labor markets. We then show that software adoption frees up accountants to focus on operational and finance tasks, and enables the firm-level implementation of practices such as supply chain management and enterprise risk management. Our results illustrate how labor market scarcity can induce technology adoption, which in turn spurs employee re-tasking, consistent with models of directed technological change. 

While securities lending brings in additional revenues for passive funds, lending shares in portfolio firms impedes voting rights for the investor and increases cost of capital for the firm. We investigate whether ESG funds engage in less securities lending compared to other funds as a result of these frictions. Despite widespread lending by passive funds, passive ESG funds lend 30\% less than otherwise comparable non-ESG funds, even for the same stock. This reduced lending leads ESG funds to forgo income equivalent to roughly 40\% of their operating expenses. Our evidence is consistent with ESG investors being motivated by protecting voting rights to oppose management and avoiding the facilitation of short selling that would otherwise increase capital costs for portfolio firms. At the stock level, this underlending increases borrowing costs, creating short-sale frictions for the firms they hold. We contribute to our understanding of ESG investors' nonpecuniary choices and highlight a unique channel through which passive funds can act on nonpecuniary preferences.