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The Dark Side of Trademark Protection with Davidson Heath
Revise & Resubmit, Review of Financial Studies
We study the effects of trademark protection on firm profits, value and strategy. Using diff-in-diff and switching estimates around the passage and nullification of the Federal Trademark Dilution Act (FTDA) we find that from 1996 to 2002 the FTDA raised treated firms’ operating margins by 12% and firm values by 9.5% on average. The FTDA’s passage was followed by a spike in trademark lawsuits, lower entry, and higher concentration in more affected industries. Firms granted stronger trademark protection reduced both product quality and innovation, and extended protected brands into all-new product markets.
Secondary Markets, Animal Spirits, and Corporate Investment
(Job Market Paper)
This paper examines the causal effect of secondary market volatility on corporate investment. I find that market downturns lead to a 60% increase in the probability of pharmaceutical companies abandoning early-stage investments, even when these downturns are temporary and the underlying value of these investments is insensitive to market fluctuations. I find that financing constraints appear to drive this behavior, suggesting that secondary markets have important feedback effects on primary markets that negatively affect future innovation and economic growth.
The Principal-Agent Problem and Employee Monitoring With Jeffrey Coles and Nathan Seegert
We examine whether increased employee monitoring can create firm value by reducing the principal-agent problem. Using a state-run vehicle monitoring program as a natural laboratory, we find that increased monitoring leads to significant decreases in fuel, maintenance, and accident costs. These cost savings appear to be driven by reductions in moral hazard issues and subsequent improvements in employee behavior. We do not find that increased monitoring resulted in negative externalities, such as decreased performance or increased absenteeism.
A growing body of literature claims that CEOs are irrationally overconfident. I find evidence that this “overconfident” behavior is actually quite profitable, indicating that CEOs exhibit behavioral biases less often than previously thought. Firms with “overconfident” CEOs consistently earn returns above the S&P500, with significant Fama-French five-factor alphas. I find that most overconfidence measures mechanically sort firms on profitability and growth, and this subsequently leads to the appearance of CEO overconfidence.
A pH-sensitive function and phenotype: evidence that EutH facilitates diffusion of uncharged ethanolamine in Salmonella enterica
Journal of Bacteriology 186.20 (2004): 6885-6890.
The eutH gene is part of an operon that allows Salmonella enterica to use ethanolamine as a sole source of nitrogen, carbon, and energy. Although the sequence of EutH suggests a role in transport, eutH mutants use ethanolamine normally under standard conditions (pH 7.0). These mutants fail to use ethanolamine at a low pH. Evidence is presented that protonated ethanolamine (Eth0) does not enter cells, while uncharged ethanolamine (Eth0) diffuses freely across the membrane. The external concentration of Eth0 varies with the pH (pK = 9.5). At pH 7.0, the standard ethanolamine concentration (41 mM) provides enough Eth0 for an influx rate that can support growth with or without EutH. When a lowered pH and/or ethanolamine concentration reduced the Eth0 concentration below 25 μM, EutH was needed to facilitate diffusion. EutH+ cells grew normally at Eth0 concentrations above 3 μM, close to the Km (9 μM) of the first degradative enzyme, ethanolamine ammonia lyase. It is suggested that EutH facilitates diffusion of Eth0. As predicted for a transporter, EutH contributed to the toxicity of ethanolamine seen under some conditions; furthermore, fusion of EutH to fluorescent Yfp protein provided evidence that EutH is a membrane protein.
FINAN 3040 (Summer 2018) - Financial Management (Evaluations)