Current Research

Abstract: We examine the impact of conflict-free certifications for small-scale gold mines, introduced to comply with the Dodd-Frank Act, on conflict dynamics in the Eastern Democratic Republic of the Congo. While Dodd-Frank enactment itself did not significantly alter conflict patterns, actual certifications displaced armed group-initiated conflicts from within a 10-kilometer radius around certified mines to mining areas 25-75 kilometers away. Consistent with full displacement, overall conflict intensity within a 75-kilometer radius of certified mines remained largely unchanged, and conflict intensity is not decreasing in certification frequency at the aggregate territory level. Our findings suggest that conflict mineral certifications prompt stationary armed groups to reallocate their protective activities from uncertified to certified mines, ultimately failing to meet policymakers' objective of alleviating the humanitarian crisis in the Congo.

Press: Becker-Friedman Institute Research Brief, The Pie: An Economics Podcast, Chicago Booth Review, SEC Response to GAO Report

Presentations: Copenhagen Business School, University of Chicago* (Booth, Development), University of Rochester (Simon), Brigham Young University (Marriott), Stanford University (GSB), 2024 Midwest International Economic Development Conference* (UChicago), London School of Economics, 2024 Conference on Financial Economics and Accounting* (CFEA), 2024 CSEAR Africa Conference* (scheduled), 2025 American Economic Association Annual Meeting* (ASSA, scheduled)

Abstract: We examine whether oil and gas corporations fulfill their Zero Routine Flaring commitments in Africa to understand the role of privately enforced sustainability initiatives in the absence of effective host governments. Consistent with firms following through on commitments, gas flaring in continuously operated blocks declines by 35%, with larger reductions in countries with the weakest preexisting governmental oversight and environmental performance. Despite the scope for trade, block divestitures from committed to uncommitted firms are rare. However, when these divestitures do occur, they are associated with an almost 70% increase in flaring. Given the infrequency of divestitures and substantial improvements for continuously operated blocks, commitments are associated with a net reduction in carbon dioxide-equivalent emissions of 43 million metric tons. Overall, our findings suggest that corporate sustainability efforts to meet privately enforced commitments may be particularly beneficial in areas where public governance is an ineffective constraint on corporate behavior.

Press: Chicago Booth Review (forthcoming)

Presentations: University of Chicago* (Booth), 2024 PRI In-Person Academic Network Conference*, 2024 CSEAR Africa Conference (scheduled), 2025 Centre for African Studies Conference (scheduled)

Abstract: We study how consumers’ trust in banks influences their borrowing decisions. We use bank enforcement actions as a shock to bank reputation, undermining consumers' trust in banks. Utilizing granular loan data from a credit reporting agency that links borrowers to banks, we find a decline in borrower and loan quality for loans issued by banks under enforcement. Notably, this decline is absent in news deserts, counties experiencing newspaper closures, and those with fewer newspaper establishments, reinforcing a trust mechanism as poor local information environments mitigate the reputational damage from enforcement. Our findings are not attributable to supply-side factors such as increased lending volume or loosened credit terms. Additionally, survey data indicate that enforcement actions are associated with declining local trust in banks and bankers. Overall, our results suggest that trust in banks influences borrower behavior.

Presentations: 2024 Haskayne & Fox Accounting Conference (UCalgary), Hong Kong University (Business School), City University of Hong Kong (School of Business), 2024 CAFRAL Annual Conference (scheduled), 2024 Hawaii Accounting Research Conference (HARC, scheduled)

Abstract: This study examines how accounting fraud affects the financial health of individuals who reside in spatial communities where economically important but fraudulent firms are headquartered. Utilizing a U.S. consumer credit panel with detailed credit histories, we analyze both financial decision-making before fraud revelation and financial distress after revelation. Upon revelation, we find significant increases in financial distress indicators among spatially exposed individuals. On average, we observe that debt in collection increases for one in every hundred to two hundred individuals while credit card delinquency and consumer bankruptcy are similarly affected. Further, we reveal that such financial distress increases with misinformed financial decisions before fraud revelation. Overall, we offer critical insight into the adverse effects that accounting fraud can have on a broad set of individuals beyond a firm’s central stakeholders.

Presentations: University of Chicago (Booth), Paderborn University, 2023 TRR 266 Conference, IE Business School, IESEG School of Management, Erasmus University Rotterdam, 2024 VHB Annual Meeting

Abstract: Rising political tensions between the U.S. and China are reshaping regulation on cross-border investment and trade between the countries. Media coverage and anecdotal evidence about foreign farmland acquisitions near US military bases have taken center stage and added fuel to this debate. However, the existing evidence has not clearly distinguished between the potential economic and political forces behind foreign farmland transactions. We empirically test for this political benefit hypothesis. We match foreign land purchase data with military base location data, local demographic data, and weather data to better control for the underlying economic forces and use variation in state and federal-level laws that affect politically motivated foreign farmland investment. First, our findings demonstrate that militarily competing countries tend to purchase farmland closer to US military bases. This effect is eliminated after increased regulatory scrutiny on foreign investment through the adoption of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Second, we show that land plots closer to military bases have a higher sales value, this effect is exacerbated after FIRRMA, and this effect is especially apparent for purchases by militarily competing countries. Finally, we discover that this military base proximity premium is eliminated in states requiring foreign land purchase disclosure, and this effect is especially apparent after FIRRMA. Our results, taken together, support the political motive hypothesis for these foreign land acquisitions. Collectively, our findings provide novel descriptive evidence that can help inform policy makers on foreign investment regulation.

Presentations: 2023 MIT Asia Conference in Accounting (Singapore Management University)

Abstract: We provide twelve best practices and discuss how each practice can help researchers accurately, credibly, and ethically use Generative AI (GenAI) to enhance experimental research. We split the twelve practices into four areas. First, in the pre-treatment stage, we discuss how GenAI can aid in pre-registration procedures, data privacy concerns, and ethical considerations specific to GenAI usage. Second, in the design and implementation stage, we focus on GenAI's role in identifying new channels of variation, piloting and documentation, and upholding the four exclusion restrictions. Third, in the analysis stage, we explore how prompting and training set bias can impact results as well as necessary steps to ensure replicability. Finally, we discuss forward-looking best practices that are likely to gain importance as GenAI evolves.