Working Papers:

"Regulator Vacancies and Enforcement Behavior"

• • Abstract: This paper studies how internal oversight in the Securities and Exchange Commission’s (SEC) regional offices affects enforcement behavior. The substantial discretion granted to SEC employees in enforcement activities makes it important to understand how the SEC uses internal monitoring to align individual actions with the agency’s priorities. I exploit the staggered timing of regional director turnover to examine whether vacancies in this position affect employees’ enforcement effort. I find that while employees maintain observable effort, measured as the number of investigations opened, they reduce other dimensions of effort by shifting toward less complex, lower-effort investigations. Investigations opened during vacancy periods are, on average, 64 days shorter and 10.5% less likely to result in an enforcement action. The shift in investigation characteristics reflects a change in investigation selection, as offices are less likely to pursue signals of misconduct and investigations aligned with SEC priorities. These findings highlight the important role of internal oversight in sustaining the quality and effectiveness of regulatory oversight.  

  • Dissertation

  • Committee: Gwen Yu (Chair), Greg Miller, Christopher Williams

"SEC Investigations and Debt Contracting" with Christopher Williams

• • Abstract: We investigate how lenders respond to regulatory uncertainty arising from Securities and Exchange Commission (SEC) investigations and whether familiarity with individual regulators mitigates this uncertainty. SEC investigations are opaque, discretionary events that create uncertainty about potential enforcement outcomes. Using data on syndicated loans issued to firms under SEC investigation, we find that loan spreads increase significantly during investigations; however, this effect is attenuated when lenders are familiar with the regional director overseeing the investigation—that is, when they have previously extended credit to borrowers investigated by the same regulator. The mitigating effect of regulator familiarity strengthens with repeated interactions and prior exposure to completed enforcement actions, suggesting that lenders learn about individual regulators’ enforcement styles over time. We further show that while both borrower-lender relationships and regulator familiarity reduce spreads, only strong borrower relationships provide incremental benefits once the lender understands the regulator. Following turnover in SEC regional directors, loan volumes and sizes decline temporarily, consistent with a loss of relational knowledge. Together, these findings highlight that individual regulators shape private credit markets and that familiarity with regulators, not just borrowers, influences how lenders assess and price regulatory uncertainty. 

"The Economic Impacts of Fiscal Policy via the Banking Sector: Evidence from Deferred Tax Assets" with Daphne Armstrong and John Gallemore

• • Abstract: One of the primary motivations for corporate tax rate decreases is to stimulate investment. However, because deferred tax assets (DTA) are a component of bank capital and valued at the relevant tax rate, tax rate cuts can diminish the value of DTA capital. Since banks’ ability to lend depends on their capital, this suggests that tax rate cuts could reduce bank lending. Using the corporate tax rate cut in the Tax Cuts and Jobs Act, we find that banks with significant DTA balances experienced meaningful reductions in the value of their DTA capital. The banks with higher reductions in DTA capital, in turn, reduced their commercial lending post-TCJA, particularly in lending to small businesses. Using granular bank-county-level data on small business lending, we find that high DTA capital decline banks reduce lending more to smaller counties and low-income counties. Finally, we document that, after the TCJA, counties that have more small business lending from high DTA capital decline banks experience larger reductions in small business lending post-TCJA, as well as reduced local employment and establishments. Overall, we conclude that tax policy can have unintended consequences on local economies through the variation in lending created by the banking sector. 

Research in Progress:

• "Individual Investors and Taxes" with Daphne Armstrong and Ryan Wilson