Research

Securities regulation, insider behavior, and corporate litigation

Working Papers

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.

Key Insights

  • SEC's 2022 insider trading regulations led to a substantial reduction in stock donations by corporate insiders
  • The decline in giving was not limited to potentially manipulative donors—even timely reporters and consistent givers reduced their donations
  • Regulations inadvertently discouraged legitimate charitable giving among insiders least likely to be engaging in manipulative behavior

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.

Key Insights

  • Firms adopting B Corp certification experience increased costs, particularly in SG&A expenses
  • Firms with higher B Impact Assessment scores integrate social missions more efficiently, showing lower operational overhead
  • Despite reduced profitability, B Corps attract significantly more private equity investment in the years following certification

Works in Progress

The Value of Shareholder Proposals

With Lindsey Gallo, Kendall Lynch, and Greg Miller — Data Analysis Phase

External Monitors of Internal Controls: Evidence from Caremark Claims

With Greg Miller — Data Analysis Phase