Valuation, banking, and regulator disclosure
Recognition of Forward-Looking Estimates and Managerial Learning: Evidence from CECL, with Oliver Binz (ESMT Berlin) and Matthew A. Phillips (MIT)
This study uses the adoption of current expected credit loss reporting for banks as a setting to examine the implications of recognition of managers’ forward-looking estimates for managerial learning from secondary equity markets. We posit that recognition of banks’ expected credit losses reduces incentives for investors to privately collect and trade based on this information, thereby reducing the informativeness of stock price for banks’ lending decisions. We find robust evidence of banks’ managerial learning from stock prices under the incurred loss model and that this learning is attenuated upon the adoption of the expected credit loss model. The results are concentrated in components of the banks’ lending portfolio where managers have a relatively lower information advantage over equity market participants and are robust to employing alternative control groups and measurement approaches. Lastly, we find some evidence that the reduction in learning hurts banks’ lending efficiency.
Predicting Profitability of Newly Established Firms, with Katja Kisseleva-Scherenberger (Frankfurt School of Finance & Management) and Per Olsson (ESMT Berlin)
This study evaluates the extent to which one can predict the profitability of newly established firms. Profitability starts mean-reverting with an average one-year persistence rate of almost 50% as early as at firm age two and overcomes the most of the initial difference by the age four. This is primarily driven by high persistence rates in revenues and personnel expenses. Venture capital-backed firms exhibit an upward-reversion only and are fully converged (in median terms) by the age of six. While their revenue and personnel expenses persistence is slightly lower, capex exhibits a more persistent pattern in these firms. Overall, we show that profitability is predictable from the beginning of firm life and is useful in early-stage investment and lending decision-making processes.
Besides research, she likes reading and training for sports.
