Faculty Research - Finance Research Publications

The effects of residential zoning in U.S. housing markets.
Journal of Urban Economics
Jaehee Song
Sep. 2025, Vol. 149

Abstract: I construct a new nationwide dataset to measure the stringency of residential zoning in the United States and examine its effects on housing production, prices, and demographic sorting. First, I develop and implement a structural break detection algorithm to infer minimum lot size regulations. The dataset spans over 16,000 local jurisdictions within Core-Based Statistical Areas, capturing both cross-jurisdictional and within-jurisdictional variation in zoning stringency. I find that 18.5 percent of single-family home constructions bunch at the minimum lot size threshold, suggesting that these zoning requirements are binding for a substantial share of single-family development. Second, I estimate the effects of these regulations on housing market outcomes, exploiting variation across nearby zoning districts within municipal border regions. The results show that minimum lot size regulations increase home sizes, sales prices, and rents. Moreover, restrictive zoning disproportionately attracts high-income white homeowners, reinforcing patterns of residential segregation.

Impact of Energy-Based Safety Training on Quality of Prejob Safety Meetings and Control of Hazardous Energy in Construction: Multiple Baseline Experiment
Journal of Construction Engineering & Management
Nathalie Moyen, Siddarth Bhandari
Additional authors: Arnaldo Bayona, Matthew Hallowell, Alexander Lien
Jul. 2025, Vol. 151 Issue 7, p1-13

Abstract: Serious injuries and fatalities (SIFs) continue to plague the construction industry. The preponderance of evidence suggests that preventing SIFs requires the identification, assessment, and control of hazardous energy. In this study, we isolated and measured the impact of energy-based safety training on the quality of prejob safety briefs and the presence of direct controls during subsequent work. We conducted a standardized training intervention in both English and Spanish and tested it via a multiple baseline experiment on 10 construction crews working in the US and Canada. Dependent variables were measured using a prejob safety brief quality scoring rubric and the High-Energy Control Assessment (HECA) protocol. The training caused immediate and significant improvements in the quality of prejob safety briefs and a measurable but smaller effect on the HECA score. Whereas prejob safety meeting scores and effect sizes were consistent, HECA was highly variable across the work crews both before and after the training. This suggests that, although short-term impacts on the quality of safety planning may occur over a short time frame, the impacts on the control of hazardous energy may require comparatively more time and data to achieve conclusive results. Methodologically, this study demonstrates an experimental protocol for isolating and attributing the impact of a safety intervention over short periods. Such a protocol may be used in practice to draw casual inferences, and is a step toward the ability to objectively measure the return on safety investment.

Norms, institutions, and digital veils of uncertainty—Do network protocols need trust anyway?
Regulation & Governance
Eric Alston
Jul. 2025, Vol. 19 Issue 3, p722-739

Abstract: In large and complex human groups, social rules reduce individuals' uncertainty about their own choice set, including through these rules' simultaneous influence on the choice set of other individuals. But uncertainty varies as to the extent to which it is knowable and quantifiable ex ante. Therefore, different classes of social rules deal with the future uncertainty of individuals' conduct in structurally distinct ways, with institutions and norms being the hallmark example of this distinction. Institutions, through their costly definition and enforcement by a known organization, require specific delineation of behavior and penalties ex ante, meaning they of necessity confront "known unknowns" (risk), or the conduct of members of an organization that can be predicted ex ante. Norms, in contrast, are only effective in shaping behavior if sufficiently shared within a community, which means their application is automatic in expectation to an individual ordering their conduct considering potential norms. This makes norms apply to ex ante known and unknown situations alike, relative to the precision that the articulation of institutions requires with respect to human behavior. Although digital governance carries the benefits (and costs) of considerable institutional "completeness," governance by protocol is nonetheless incomplete in the face of the complex set of exogenous shocks and human actions that a given digital networked organization will experience. This means digital institutions need to mimic the adaptability of institutions more generally, through the institutional mechanisms of flexibility detailed in this analysis. More generally, though, the fact that norms can serve as a complementary gap‐filler in contexts where institutions do not reach suggest that digital organization designers cannot avoid simultaneous consideration of the human community of network users that will define the norms that become crucial in periods of true uncertainty for any organization. 

Excess Capacity, Marginal q, and Corporate Investment
Journal of Finance
David Ikenberry
Addtional author: Gustavo Grullon
Jun. 2025, Vol. 80 Issue 3, p1533-1592

Abstract: Theory posits that when managers anticipate excess capacity, average q becomes a biased estimator of marginal q as the potential for underutilizing new capital reduces the marginal benefit of investing. After correcting for this source of measurement error, the explanatory power of Tobin's q substantially improves in time‐series and cross‐sectional regressions as well as in out‐of‐sample tests. These findings, together with a secular erosion in capacity utilization, help explain why corporate investment rates have been declining for decades despite average q increasing significantly. Our analysis indicates that economic rigidities have contributed to the persistent erosion in capacity utilization.

How Do Foreign Labor Regulations Affect Firms' Operating Strategies?
Journal of Financial & Quantitative Analysis
Katie Moon
Additional author: Giorgo Sertsios
Mar. 2025, Vol. 60 Issue 2, p910-947

Abstract: We examine how changes in foreign labor regulations affect U.S. multinationals' operating strategies. We show that firms with integrated operations in countries where labor regulations become tighter tend to establish arm's-length relations with local business partners in that nation. The substitution between integrated and arm's-length operations is stronger toward joint ventures than suppliers and weaker in the presence of financial constraints. Our findings are consistent with the idea that when firms find it harder to terminate their workers in integrated operations, they change to an operating model where it is easier to replace or discontinue business partners instead of employees.

Specialization and performance in private equity: Evidence from the hotel industry
Journal of Financial Economics
Christophe Spaenjers
Additional author: Eva Steiner
Dec. 2024, Vol. 162, 103930

Abstract: Using granular data on U.S. hotel investments over the past two decades, we show that industry-specialist PE firms achieve higher net income from operations and higher capital gains from sale than generalist PE firms for comparable properties. Those results are driven by specialists implementing more and larger cost savings without compromising revenues. Fundamentally, specialists utilize their hotel-specific operating expertise to produce superior performance outcomes. We show that specialists across investment sectors possess deeper industry-specific operating expertise. Our results suggest that specialist PE firms can compete with their generalist rivals by leveraging such expertise in a chosen market niche.

Broken promises, competition, and capital allocation in the mutual fund industry
Journal of Financial Economics
Simona Abis
Additional author: Anton Lines
Dec. 2024, Vol. 162, 103948

Abstract: What characteristics of mutual funds do investors care about? In addition to performance and fees, we show that investors exhibit a clear preference for managers who adhere to the strategies they describe in their prospectuses. Capital flows respond negatively when funds diverge from the average holdings of their text-based strategy peer groups, but positively when they outperform those peer averages. We identify this effect using a novel instrumental variables approach, and show that funds face a delicate trade-off between keeping their promises and outperforming their peers who make similar promises.

Norms, institutions, and digital veils of uncertainty—Do network protocols need trust anyway?
Regulation & Governance
Eric Alston
Sep. 2024, p1

Abstract: In large and complex human groups, social rules reduce individuals' uncertainty about their own choice set, including through these rules' simultaneous influence on the choice set of other individuals. But uncertainty varies as to the extent to which it is knowable and quantifiable ex ante. Therefore, different classes of social rules deal with the future uncertainty of individuals' conduct in structurally distinct ways, with institutions and norms being the hallmark example of this distinction. Institutions, through their costly definition and enforcement by a known organization, require specific delineation of behavior and penalties ex ante, meaning they of necessity confront “known unknowns” (risk), or the conduct of members of an organization that can be predicted ex ante. Norms, in contrast, are only effective in shaping behavior if sufficiently shared within a community, which means their application is automatic in expectation to an individual ordering their conduct considering potential norms. This makes norms apply to ex ante known and unknown situations alike, relative to the precision that the articulation of institutions requires with respect to human behavior. Although digital governance carries the benefits (and costs) of considerable institutional “completeness,” governance by protocol is nonetheless incomplete in the face of the complex set of exogenous shocks and human actions that a given digital networked organization will experience. This means digital institutions need to mimic the adaptability of institutions more generally, through the institutional mechanisms of flexibility detailed in this analysis. More generally, though, the fact that norms can serve as a complementary gap‐filler in contexts where institutions do not reach suggest that digital organization designers cannot avoid simultaneous consideration of the human community of network users that will define the norms that become crucial in periods of true uncertainty for any organization.

Blood Money: Selling Plasma to Avoid High-Interest Loans
Review of Financial Studies
Emily A. Gallagher
Additional author: John M Dooley
Sep. 2024, Vol. 37 Issue 9, p2779-2816

Abstract: Little is known about the motivations and outcomes of sellers in remunerated markets for human materials. We exploit dramatic growth in the U.S. blood plasma industry to shed light on the sellers of plasma. Sellers tend to be young and liquidity-constrained with low incomes and limited access to traditional credit. Plasma centers absorb demand for nontraditional credit. After a plasma center opens nearby, demand for payday loans falls by over 13% among young borrowers. Meanwhile, foot traffic increases by over 4% at nearby stores, suggesting that constrained households use plasma markets to smooth consumption without appealing to high-cost debt.

Friends During Hard Times: Evidence from the Great Depression
Journal of Financial & Qualitative Analysis
Diego García
Additional authors: Tania Babina, Geoffrey Tate
Sep. 2024, Vol. 59 Issue 6, p2647-2694

Abstract: Using a novel data set of over 3,500 public and private firms, we construct the network of executive and director connections prior to the 1929 financial market crash. We find that more connected firms have 17% higher 10-year survival rates. Consistent with a working capital channel, the results are strongest for small, private, cash-poor firms, and firms located in counties with high bank suspension rates. Moreover, connections to cash-rich firms that increase accounts receivable matter the most. Our results suggest that network connections can play a stabilizing role during a financial crisis by easing the flow of capital to constrained firms.

Rocky mountain high: a tale of boom and bust in the new wild west
Business Economics
Richard Wobbekind
Jul. 2024, Vol. 59 Issue 3, p200-202

Abstract: Finn Murphy's book, "Rocky Mountain High: A Tale of Boom and Bust in the New Wild West," provides an engaging and insightful look into the world of business and life in Colorado's hemp industry. The book explores the legalization of industrial hemp in 2018 and the subsequent influx of farmers and entrepreneurs into the market. Murphy, a serial entrepreneur, shares his experiences and lessons learned as he navigates the challenges of growing and processing hemp. The book offers valuable insights into market dynamics, regulatory issues, and the human side of business.