Embedded Files
Research
Job Market Paper
Reducing Volatility at the Source:
Investment in Supply Chain Risk Management
Job Market Paper, solo-authored
Firms invest heavily in reducing the volatility of their real output. To establish this fact, I introduce a new measure of this investment: total salaries paid to supply chain risk management (SCRM) workers. SCRM investment is strongly predictive of lower output volatility within industry and is large in the aggregate, approximately $60–$130 billion annually among US nonfinancial firms. High-SCRM firms have more diversified supplier networks and are significantly less likely to lose a major customer following industry-wide supply shocks relative to low-SCRM industry peers. Despite its benefits, investment in SCRM is restricted by financial constraints for many firms. Using a novel IV for IPO completion—SEC office workload at the time of filing—I show that IPO completion causes compliers to nearly double their SCRM wage bill allocation post-IPO, an effect driven by small firms expecting large cash proceeds from the equity sale. SCRM, by reducing output volatility, appears to contribute to firm value through a channel distinct from its role in reducing cash flow volatility: ability to reliably deliver on customer contracts. I develop a model in which SCRM investment reduces the probability of an output shortfall, which increases firm value in a way that cannot be replicated by financial instruments. The model’s core prediction is that whether SCRM and financial hedging are close substitutes depends on the cost of losing a customer; this prediction holds in the data.
Publications
Firms invest heavily in customer capital; such investment is a main source of intangible capital value. Customer capital investment is measured using sales and marketing expense from income statements, salaries paid to workers in sales and marketing, and text from SEC filings. There is large and persistent variation across industries in customer capital investment; industries investing the most are growing as a share of aggregate enterprise value. Variation in sales and marketing expense explains a large amount of industry-level variation in intangible capital value. Industries characterized by information frictions and network effects in demand invest most heavily in customer capital.
FinTech firms spend far more resources on sales and marketing efforts than traditional financial firms. In the language of He, Mostrom and Sufi (2025), substantial investment in customer capital is an instrumental component of the FinTech business strategy. This essay demonstrates this robust pattern and offers a preliminary assessment of the economics behind why customer capital is so critical for FinTech.
Venture Capital-Led Entrepreneurship in Health Care
With Amitabh Chandra and Cirrus Foroughi
in The Role of Innovation and Entrepreneurship in Economic Growth (2022),
edited by Michael J. Andrews, Aaron Chatterji, Josh Lerner, and Scott Stern
A variety of pull and push forces influence innovation in health care, with venture capitalists playing an extremely important role in marshaling the pull forces that drive innovation. The NIH (or government more generally) is responsible for reducing market failure by subsidizing research that no commercial entity would fund. Our analysis has uncovered several new facts on the operation of these entities. On the VC side, VC dollar allocations have moved away from investment in health care, and a disproportionate share of VC investments— almost 60 percent— are in drugs and devices. While there are many justifications for this allocation, there is also a concern than the VC model will not automatically bring socially valuable innovations to market, because it will emphasize private returns over public ones... Another striking fact that deserves further exploration is that three locations account for the plurality of scientific research and also receive the majority of VC investments. Whether this represents higher quality research from these cities, or a “valley of death” is an important question for future research.
Working Paper
The Birth of Finance Capitalism in the United States:
Securities Underwriters on Corporate Boards, 1880-1920
With Carola Frydman and Eric Hilt
Latest version August 2022. New draft coming soon.
We study the presence of elite financiers on the boards of American public companies during the years 1880-1920. In 1880, only 15 percent of NYSE-listed firms had a member of a top investment bank on their board, but by 1910, more than 50 percent did. We find evidence suggesting that these relationships were formed both to aid with accessing capital markets, and to control competition. Firms with greater needs for external finance were more likely to add a top banker to their board, but bankers who held board seats with competitors were more likely to be chosen for those roles. We also find evidence that some of these relationships were formed in response to antitrust enforcement: the railroads that had been members of a cartel that was broken up in 1898 added bankers to their boards who held directorships with other members of the cartel.
Teaching & Mentorship
Macroeconomics and the Business Environment (TA)
BUSN 33050, MBA and Executive
Instructors: Christina Patterson, Joe Vavra
2023-2025
Fama-Miller Research Professional Development Fellow
Chicago-Booth Fama-Miller Center
Oversaw the weekly seminar for Fama-Miller pre-docs to present their research, providing feedback on their work and assistance with their PhD applications.
2024-2025
Peer Mentor
Chicago-Booth Finance Department
Met with first-year PhD student regularly to offer advice and guidance on coursework, research, choosing advisors, and more.
2024-2025
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