Work in Progress
10. Facing Default? (with P. Garg, M. Niessner, S. Kogan, and K. Shue)
—Presented at: Boulder Summer Conference on Consumer Financial Decision Making 2025
Working Papers
9. AI Personality Extraction from Faces: Labor Market Implications (with M. Niessner, S. Kogan, and K. Shue), June 2025
[PDF]
—Presented at (selected conferences only, * by coauthor): UBC Winter Finance Conference 2025, Young Scholars Finance Consortium 2025, Labor and Finance Conference 2025*, NBER Corporate Finance Spring Meeting 2025*, Wharton AI and the Future of Work Conference 2025, Chicago Machine Learning in Economics Summer Conference 2025*
—Featured on (selected): Yale Insights, Marginal Revolution
8. Mental Models and Financial Forecasts (with F. Bastianello and P. Decaire), July 2025
[PDF]
—Presented at (selected conferences only, * by coauthor): 1st Workshop on LLMs and Generative AI for Finance, ITAM Finance Conference 2025*, Adam Smith Workshop 2025*, NBER Asset Pricing Spring Meeting 2025*, Kentucky Finance Conference 2025*, FSU Truist Beach Conference 2025, SFS Cavalcade 2025, 7th Future of Financial Information Conference 2025, WFA 2025*, SITE Asset Pricing 2025*, NBER Corporate Finance Summer Institute 2025
7. Longevity and Occupational Choice (with U. Malmendier and D. Sosyura), July 2024
—Presented at (selected conferences only): NBER Health Economics Fall Meeting 2023, CEPR Economics of Longevity and Ageing Conference 2024, NBER SI Labor Studies 2024, AFA 2025
6. What Drives Very Long-Run Cash Flow Growth Expectations? (with P. Decaire), April 2025
[PDF]
—Presented at (* by coauthor): Mid-Atlantic Research Conference in Finance (MARC) 2024, Behavioral Finance Conference at Bocconi 2024, CESifo Venice Summer Institute Expectation Formation 2024, Yale Junior Finance Conference 2024*, AFA 2025, NBER Long-Term Asset Pricing Meeting 2025
—Best Paper Award at Mid-Atlantic Research Conference in Finance (MARC) 2024
—Featured on: Finance at Wharton Discoveries Blog, Knowledge at Wharton, Fortune Magazine’s CFO Daily Newsletter
5. Prosociality and Layoffs (with C. Hamilton and U. Malmendier), March 2025
—Presented at (selected conferences only, * by coauthor): AFA 2023*, RCFS Winter Conference 2023, Drexel Corporate Governance Conference 2023, Erasmus Corporate Governance Conference 2023, SITE Psychology and Economics 2023, NBER Behavioral Finance Fall Meeting 2023, Adam Smith Workshop 2024, NBER Organizational Economics Spring Meeting 2025
4. Excess Commitment in R&D (with T. Liu), May 2025
The Review of Financial Studies, R&R
[PDF]
—Presented at (selected conferences only, * by coauthor): Kentucky Finance Conference 2023, LBS Summer Finance Symposium 2023, EFA 2023, NFA 2023, HEC Paris Entrepreneurship Workshop, AFA 2024*, Texas Finance Festival 2024*, NBER Corporate Finance Spring Meeting 2024, SFS Cavalcade 2024*
Publications and Forthcoming Papers
3. CEO Stress, Aging, and Death (with M. Borgschulte, C. Liu, and U. Malmendier)
The Journal of Finance, forthcoming
[PDF] [NBER WP] [CEPR DP]
—Presented at (selected conferences only, * by coauthor): NBER Organizational Economics Fall 2019 Meeting*, Finance, Markets, and Organizations (FOM) Conference 2019, AFA 2020*, NBER Aging and Health 2022, Chicago Booth Behavioral Approaches to Financial Decision-Making Conference 2022
—Featured on (selected): Marginal Revolution, Bloomberg, Quartz, Newswise, FAZ, Wharton on SiriusXM, Berkeley Haas Magazine, Market Watch, The New York Times DealBook, Business Insider, Forbes, NBER Digest, IZA Commentary
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We assess the long-term effects of managerial stress on aging and mortality. Using a difference-in-differences design, we apply neural network–based machine-learning techniques to CEOs’ facial images and show that exposure to industry distress shocks during the Great Recession produces visible signs of aging. We estimate a one-year increase in “apparent” age. Moreover, using data on CEOs since the mid-1970s, we estimate a 1.1-year decrease in life expectancy after an industry distress shock, but a two-year increase when antitakeover laws insulate CEOs from market discipline. The estimated health costs are significant, both in absolute terms and relative to other health risks.
2. In Too Deep: The Effect of Sunk Costs on Corporate Investment
The Journal of Finance, June 2025, Vol 80 (3), pp. 1593-1646.
[PDF]
—Presented at (selected): AFA 2021, Behavioral Economics Annual Meeting (BEAM) 2021, Finance, Markets, and Organizations (FOM) Conference 2021, Berkeley-Stanford Joint Finance Conference Fall 2019, Michigan Ross, U Maryland, UCL, Wharton
Featured on: Knowledge@Wharton
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Sunk costs are unrecoverable costs that should not affect decision-making. I provide evidence that firms systematically fail to ignore sunk costs and that this leads to significant investment distortions. In fixed-exchange-ratio stock mergers, aggregate market fluctuations after parties enter into a binding merger agreement induce plausibly exogenous variation in the final acquisition cost. These quasi-random cost shocks strongly predict firms’ commitment to an acquired business following deal completion, with an interquartile cost increase reducing subsequent divestiture rates by 8% to 9%. Consistent with an intrapersonal sunk cost channel, distortions are concentrated in firm-years in which the acquiring CEO is still in office.
1. Behavioral Corporate Finance: The Life Cycle of a CEO Career (with U. Malmendier)
Oxford Research Encyclopedia of Economics and Finance, Oxford University Press, September 2020
[PDF] [NBER WP] [CEPR DP]
Featured on: Harvard Law School Forum on Corporate Governance, Wharton on SiriusXM, Knowledge@Wharton, Penn Today
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One of the fastest-growing areas of finance research is the study of managerial biases and their implications for firm outcomes. Since the mid-2000s, this strand of behavioral corporate finance has provided theoretical and empirical evidence on the influence of biases in the corporate realm, such as overconfidence, experience effects, and the sunk-cost fallacy. The field has been a leading force in dismantling the argument that traditional economic mechanisms — selection, learning, and market discipline — would suffice to uphold the rational-manager paradigm. Instead, the evidence reveals that behavioral forces exert a significant influence at every stage of a chief executive officer’s (CEO’s) career. First, at the appointment stage, selection does not impede the promotion of behavioral managers. Instead, competitive environments oftentimes promote their advancement, even under value-maximizing selection mechanisms. Second, while at the helm of the company, learning opportunities are limited, since many managerial decisions occur at low frequency, and their causal effects are clouded by self-attribution bias and difficult to disentangle from those of concurrent events. Third, at the dismissal stage, market discipline does not ensure the firing of biased decision-makers as board members themselves are subject to biases in their evaluation of CEOs.
By documenting how biases affect even the most educated and influential decision-makers, such as CEOs, the field has generated important insights into the hard-wiring of biases. Biases do not simply stem from a lack of education, nor are they restricted to low-ability agents. Instead, biases are significant elements of human decision-making at the highest levels of organizations.
An important question for future research is how to limit, in each CEO career phase, the adverse effects of managerial biases. Potential approaches include refining selection mechanisms, designing and implementing corporate repairs, and reshaping corporate governance to account not only for incentive misalignments but also for biased decision-making.