Abstract: Using a novel instrumental variable based on mandatory board retirement policies of US public firms, I provide causal evidence that shared directors facilitate the mirroring of corporate actions across firms. The actions examined include dividend changes, share repurchases, seasoned equity offerings, and stock splits. This diffusion cannot be explained by alternative inter-firm linkages such as customer-supplier ties, common institutional ownership, shared hedge fund activism, or within-industry competition. Long-tenured, non-busy outsider directors drive this effect: their experience gives them influence to sway board decisions, while their limited insider knowledge about the firms leads them to rely more on external information transmitted through interlocks. A long-short portfolio that buys firms whose interlocked peers undertake a given action and shorts matched controls earns abnormal returns, suggesting investor underreaction to directors' connections. These results highlight board interlocks as an important channel for both corporate decision-making and return predictability.

Abstract:  Losses constitute a crucial aspect of businesses, highlighting the importance of government loss-sharing provisions. Using variation in state-level net operating loss carryover policies in the United States, I find that carryback provisions increased many forms of corporate investment, financed by both internal cash and external debt, while carryforward provisions had a null effect on firms. On the extensive margin, census data reveals that carryback provisions spurred new business creation. Instead of the risk-sharing channel, I show that financially unconstrained firms drove the investment responses through an efficiency mechanism, where lower tax liability allowed firms to expand without increasing business risk.

Abstract: This paper studies how startups and investors respond to capital gains taxation, using a quasi-experiment of Qualified Small Business Stock (QSBS) capital gains tax exemption in 2010. Startups within treated industries received 8.6% to 13.5% more funding, which allowed them to scale up their business, and their revenue increased by 21%. However, treated startups’ innovation and profits did not increase. On the extensive margin, I find increases in new startup entry into the treated industries, but one in four of those startups eventually fail. These evidence suggests that investors were deploying capital in lower-quality firms. Additionally, I find weak evidence that investors were timing the realization of capital gains through IPO, buyouts and mergers & acquisitions of their portfolio startups.

Abstract: We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.