Estimating the Need for Additional Bankruptcy Judges in Light of the COVID-19 Pandemic, with Jared Ellias and Mark Roe, Harvard Business Law Review (forthcoming).
Bankruptcy Spillovers, with Shai Bernstein, Emanuele Colonnelli, and Xavier Giroud, Journal of Financial Economics 133, No. 3 (September 2019): 608-633.
Asset Allocation in Bankruptcy, with Shai Bernstein and Emanuele Colonnelli, Journal of Finance 74, No. 1 (February 2019): 5-53 (Lead Article).
Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts, Management Science 64, Issue 11 (November 2018): 4967-5460.
The Ownership and Trading of Debt Claims in Chapter 11 Restructurings, with Victoria Ivashina and David Smith, Journal of Financial Economics 119, Issue 2 (February 2016): 316-335.
Subprime Foreclosures and the 2005 Bankruptcy Reform, with Donald Morgan and Matthew Botsch, Federal Reserve Bank of New York Economic Policy Review 18, No. 1 (March 2012): 47-57.
- Winner of Jensen Prize for Best Paper in Corporate Finance and Organizations (Second Prize)
Financial Costs of Judicial Inexperience, with Josh Madsen, Wei Wang, and Qiping Xu, April 2020.
Abstract: Exploiting the random assignment of corporate bankruptcy filings, we estimate financial costs of judicial inexperience. Despite bankruptcy judges' significant prior legal experience, formal education, and rigorous hiring process, cases assigned to new judges spend more time in bankruptcy, realize lower creditor recovery rates, and lower return on assets post bankruptcy, but similar refiling rates. Judges' learning curve for the average filing is one year but rises to four years for the most complex cases. Exposure to more corporate cases and a greater diversity of businesses accelerates judges' learning. Overall, the results are consistent with lower-quality restructuring by less experienced judges. Conservative estimates suggest that slight policy adjustments to the case assignment process could, in aggregate, reduce legal fees and increase creditor recoveries by approximately $10 billion for our sample period.
Trade Creditors' Information Advantage, with Victoria Ivashina, January 2018.
Abstract: Using information on the sales of debt claims for 132 U.S. Chapter 11 bankruptcy cases, we show that large trade creditors’ decisions to sell receivables of a distressed company in bankruptcy are predictive of lower recovery rates, and that in such cases these creditors sell ahead of less informed suppliers and other creditors. This result is especially pronounced for more opaque distressed firms, when trade creditors’ information advantage is likely largest. This evidence shows that suppliers that extend significant amounts of trade credit hold private information about their trade partners. Trade creditors who are geographically closer or in similar industries tend to lend the most, suggesting that these are two channels through which suppliers hold an information advantage.
Can Gambling Increase Savings? Empircal Evidence on Prize-linked Savings Accounts, with Shawn Cole and Peter Tufano, June 2018.
Abstract: This paper studies the adoption and impact of prize-linked savings (PLS) accounts, which offer lottery-like payouts to individual account holders in lieu of interest. Using micro-level data from a bank in South Africa, we show that PLS is attractive to a broad group of individuals, with financially-constrained individuals and those with no other deposit accounts particularly likely to participate. Individuals who choose to use PLS increase their total savings on average by 1% of annual income. Exploiting the random assignment of prizes, we present causal evidence that PLS substitutes for lottery gambling, but is a complement to standard savings.