Research
Job Market Paper
CECL and Internal Information Transmission: Evidence from Bank-Affiliated Analysts
I examine whether the adoption of the Current Expected Credit Losses (CECL) standard affects information transmission within bank holding companies. Using a difference-in-differences design based on a within-analyst comparison of earnings forecasts for borrowers and non-borrowers, I find that bank-affiliated analysts issue more accurate forecasts for borrowers after CECL adoption. The effect persists at long forecast horizons, strengthens over time, and increases with the magnitude of the CECL transition impact. Additional analyses show that both macro-relevant and borrower-specific information contribute to the effect. Overall, I provide the first evidence that CECL adoption has unintended consequences for cross-divisional information flows within financial conglomerates, with implications for banking regulators and accounting standard setters.
Presented at the University of Minnesota and the Financial Accounting Standards Board.
Working Papers
Beyond Monetary Incentives: The Role of Meaning in Professional Behavior and Performance
We study whether demand for meaning shapes human capital allocation and information production in capital markets. Using milestone ages (ages ending in 9) as a predictable shock to introspection, we show that individuals are more likely to quit their jobs, switch employers, and relocate internationally, without moving to higher-paying or more senior positions. We then examine financial analysts and find that milestone-age analysts issue bolder, more accurate, and more timely forecasts that elicit stronger market reactions, consistent with reduced career concerns and less herding. Survey evidence further supports value alignment and purpose-seeking as underlying mechanisms. Overall, our findings suggest that demand for meaning influences both labor-market reallocation and financial information production, highlighting nonpecuniary motives as an important behavioral force that affects agency frictions and human capital.
Do Analysts Avoid Long-Term Forecasts When Important Earnings Announcements Are Coming?
Analysts’ long-term forecasts offer valuable insights into firms’ prospects, particularly before earnings announcements of considerable significance. Although analysts are motivated to meet the increased demand for information before such events, they face the risk of reputational costs from issuing long-term forecasts that may quickly become obsolete. Using a measure of ex-ante relative importance of earnings announcements, we find that analysts are less likely to issue long-term forecasts when they anticipate that an upcoming earnings announcement will be more important. However, analysts are more likely to do so after an important earnings announcement. Our findings provide evidence of analysts’ strategic adjustments of forecast horizons in anticipation of significant information events.