Research

Trading Gifts for Transparency: Insider Giving and the SEC

Dissertation — Solo-authored

This study examines the effects of the Securities and Exchange Commission's (SEC) recent modernization of insider trading regulations on corporate insiders' stock donation behavior. The updated rules governing gifts of stock are designed to curb the manipulative use of material nonpublic information (MNPI) in insider giving and to enhance transparency in reporting. Utilizing data on stock donations reported by insiders to the SEC, I document a significant decline in the likelihood that insiders continue to give following the SEC's amendment. This reduction cannot be fully attributed to a reduction in seemingly manipulative donation practices, as I find that insiders who are least likely to strategically time their donations also exhibit a decrease in their giving behavior. This suggests that the SEC's recent regulatory changes have had broader effects, not only deterring misconduct but also attenuating legitimate charitable giving. Collectively, these findings document the effects of a recent regulatory intervention and shed light on the donation activities of corporate insiders, an important group of market participants.

Setting the Bar Early: Investor Relations and the Path to Meeting or Beating Analyst Expectations

With Kimball Chapman, Greg Miller, and Jed Nielson

Meeting or beating the analyst consensus is among the most consequential recurring outcomes for a firm, and managing analyst expectations is one of the principal means of achieving it. Given the role of investor relations (IR) in overseeing communication with analysts and investors, we examine its contribution to firms' ability to meet or beat analyst expectations and the mechanisms through which it does so. We find that firms with a dedicated internal IR function are significantly more likely to meet or beat the analyst consensus. IR firms issue guidance more frequently and calibrate it conservatively, setting targets below eventual earnings and aligning analyst expectations early in the quarter. In contrast to the walk-down pattern documented in prior work, IR firms that guide exhibit net upward intra-quarter revisions. We find no evidence that IR firms rely more on real or accrual-based earnings management and no evidence of marginal beating by a penny. As investor relations officer (IRO) tenure lengthens, attainment relies less on formal guidance, while the upward revision pattern persists, consistent with accumulated credibility substituting for public commitment. Collectively, our results suggest that IR capabilities allow firms to meet analyst expectations by calibrating them conservatively from the outset, avoiding both the intervening disappointment of a late correction and the need for earnings manipulation.

SEC Politicization and Shareholder Voice: Evidence from the No-Action Letter Process

With Lindsey Gallo, Kendall Lynch, and Greg Miller

We examine the increasing politicization of the Securities and Exchange Commission (SEC) through the lens of the no-action letter process for shareholder proposals. Using historical no-action letter decisions from 2009–2014, we develop a text-based prediction model to establish a benchmark for SEC decision-making precedent. Applying this model to shareholder proposals from 2017–2024, we find that exclusion decisions under Staff Legal Bulletin (SLB) 14I were largely consistent with historical precedent. In contrast, decisions following SLB 14L became substantially more permissive, particularly for environmental and social (E&S) proposals. Although this shift expanded shareholder access to corporate proxy statements, proposals that would have been excluded under historical precedent receive significantly lower shareholder support. Moreover, following SLB 14L, even E&S proposals that would have reached the proxy statement under historical precedent experience declines in shareholder support relative to governance proposals. Collectively, our findings highlight a potential tradeoff between two dimensions of shareholder voice in an era of increased politicization: greater access to the proxy statement driven by policy preferences does not necessarily translate into greater shareholder support and may coincide with reduced support for proposals that would have reached shareholders under prior regulatory regimes.

Hybrid Governance Models and Firm Financial Outcomes

Solo-authored — Recipient of Emeritus Ph.D. Fellowship Award (2024) for most outstanding second-year research paper across the Ross School of Business

This study investigates the impact of hybrid governance models on firms' financial outcomes. Using certified B Corps, a specific set of legally structured benefit corporations, I find that firms' costs increase following the adoption of hybrid governance models. Findings suggest that firms that prioritize their social mission more actively in their everyday business activities incur lower operating costs. In line with prior literature, I replicate findings of no strong change in firms' revenues. Coupled with rising costs, I show that firms' net income decreases following the transition. One benefit of the hybrid governance model I document is increased private equity funding. Given the recent push for for-profit firms to pursue social missions, these findings highlight the effects firms might realize when pursuing multiple goals.

External Monitors of Internal Controls: Evidence from Caremark Claims

With Greg Miller — Data Collection Phase