Published Papers
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Dividend Taxes and the Allocation of Capital, joint with Charles Boissel,
American Economic Review, conditionally accepted This paper investigates the 2013 three-fold increase in the French dividend tax rate. Using administrative data covering the universe of firms over 2008-2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to invest more. Heterogeneity analyses show that firms with high demand and returns on capital responded most while no group of firms cut their investment. Our results reject models in which higher dividend taxes increase the cost of capital and show that the tax-induced increase in liquidity relaxes credit constraints which can reduce capital misallocation. Vox column: VoxEU Online Appendix |
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Where Has All the Big Data Gone? joint with Maryam Farboodi, Laura Veldkamp and Venky Venkateswaran
Review of Financial Studies, forthcoming As financial technology improves and data become more abundant, do market prices reflect this growing information and allocate capital more efficiently? While a number of recent studies have documented rises in aggregate price efficiency, we show that there are large cross-sectional differences. The previously-documented increases are driven by a rise in the informativeness of large, growth stocks. The informational efficiency of smaller assets' prices or prices of asset with less growth potential are either flat or declining. We document these new facts and use a structural model to decompose changes in price informativeness into the effects of changes in information and in growth or volatility characteristics of the assets. Finally, by computing the initial value of data implied by our structural model, we show that these findings could be explained partly by the fact that large firms have grown relatively larger. |
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The Local Innovation Spillovers of Listed Firms
Journal of Financial Economics, Volume 141, Issue 2, August 2021, Pages 395-412 (lead article) This paper provides causal evidence of local innovation spillovers, i.e. innovation by one firm fostering innovation by neighboring firms. First, I document that exogenous shocks to innovation by listed firms affect innovation by private firms in the same geographical area. I also find that such local innovation spillovers decline rapidly with distance. Second, I find that local innovation spillovers stem at least in part from knowledge diffusing locally through two channels: learning across local firms and inventors moving from their employer to both existing firms and newly started spin-outs. Finally, I study the two-way relationship between innovation spillovers and the availability of capital. I find that local innovation spillovers lead venture capital funds from outside the area to invest more in the local area, and that conversely capital availability amplifies local innovation spillovers. |
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"Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China?", joint with Johan Hombert, Journal of Finance, Volume 73, Issue 5, October 2018, Pages 2003-2039
We study whether R&D-intensive firms are more resilient to trade shocks. We correct for the endogeneity of R&D using tax-induced changes to R&D cost. While rising imports from China lead to slower sales growth and lower profitability, these effects are significantly smaller for firms with a larger stock of R&D (by about half when moving from the bottom quartile to the top quartile of R&D). We provide evidence that this effect is explained R&D allowing firms to increase product differentiation. As a result, while firms in import-competing industries cut capital expenditures and employment, R&D-intensive firms downsize considerably less. Media: voxeu, World Economic Forum, Forbes Online appendix |
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"The Real Effects of Lending Relationships on Innovative Firms and Inventor Mobility", joint with Johan Hombert, Review of Financial Studies, Volume 30, Issue 7, 1 July 2017, Pages 2413–2445
We study whether relationship lending is conducive to the financing of innovation. Exploiting a negative shock to relationships, we show that it reduces the number of innovative firms, especially those that depend more on relationship lending such as small, young, and opaque firms. This credit supply shock leads to reallocation of inventors whereby young and promising inventors leave small firms and move out of geographical areas where lending relationships are hurt. Overall, our results suggest that credit markets affect both the level of innovation activity and the distribution of innovative human capital across the economy. Vox column |
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"Do Managers Overreact to Salient Risks? Evidence from Hurricane Strikes", joint with Olivier Dessaint, Journal of Financial Economics, Volume 126, Issue 1, October 2017, Pages 97-121
We study how managers respond to the occurrence of a hurricane event when their firms are located in the neighborhood of the disaster area. We find that the sudden shock to the perceived liquidity risk leads managers to increase the amount of corporate cash holdings and to express more concerns about hurricane risk in 10-Ks/10-Qs, even though the real risk remains unchanged. Both effects are temporary. Over time, the perceived risk decreases, and the bias disappears. The documented distortion between subjective and objective risk is large. Overall, managerial reaction to salient risks is consistent with salience theories of choice. |
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"Noisy Stock Prices and Corporate Investment", joint with Olivier Dessaint, Thierry Foucault and Laurent Frésard, Review of Financial Studies Volume 32, Issue 7, July 2019, Pages 2625–2672
Firms significantly reduce their investment in response to non-fundamental drops in the stock price of their product-market peers. We argue that this result arises because of managers' limited ability to filter out the noise in stock prices when using them as signals about their investment opportunities. The resulting losses of capital investment and shareholders' wealth are economically large, and affect even firms that are not facing severe financing constraints or agency problems. Our findings offer a novel perspective on how stock market inefficiencies can affect the real economy, even in the absence of financing or agency frictions. Vox Column |
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"Bank-Branch Supply, Financial Inclusion and Wealth Accumulation", joint with Claire Célerier, Review of Financial Studies Volume 32, Issue 12, December 2019, Pages 4767–4809
This paper studies the impact of .financial inclusion on wealth accumulation. Exploiting the US interstate branching deregulation between 1994 and 2005, we .find that an exogenous expansion of the supply of bank branches increases low-income household .financial inclusion. We then show that .financial inclusion fosters household wealth accumulation. We identify that banked households not only accumulate assets in interest bearing accounts, but also invest more in durable assets such as vehicles, have a better access to debt relative to their unbanked counterparts, and have a lower probability of facing financial strain. The results suggest that promoting .financial inclusion for low-income populations can improve household wealth accumulation and financial security. Vox Column |