Brooke's Research
Publications
[1] Boardroom Networks and Corporate Investment [SSRN Working Paper Version]
with Suyong Song
Journal of Corporate Finance, 2024, 84, 102522.
[2] Natural Disasters and Firm Leasing: A Collateral Channel [SSRN Working Paper Version]
Sole-author
Journal of Corporate Finance, 2023, 82, 102428.
with Anand M. Vijh
Financial Management, 2022, 51, 1127-1164.
Featured by Institutional Money 2021
Working Papers
[4] Waiting or Acting: The Effects of Environmental Regulatory Uncertainty
Sole-author
This paper explores how environmental regulatory uncertainty affects firms' environmental performance. It reveals that heightened uncertainty prompts firms to decrease pollutant emissions. Instead of adopting a "wait-and-see" approach, firms proactively engage in environmental innovation and adopt abatement technologies. Analysis indicates that institutional investors withdraw capital from polluting firms during periods of high environmental regulatory uncertainty. Causality is established using the Senate's pro-climate votes' standard deviation as an instrumental variable. The study also employs a difference-in-difference framework to analyze the Affordable Clean Energy (ACE) shock's impact. Overall, findings suggest a causal link between environmental regulatory uncertainty and firms' environmental efforts.
[5] Optimal Investment, Tobin's q, and Cash Flow: Does the Unobserved Productivity Matter?
with Kyoo il Kim and Suyong Song
We study the classical relationship between a firm’s investment and Tobin’s q for which unobserved productivity is another factor of a firm’s decision. Besides the potential measurement problem of Tobin’s q, controlling unobserved productivity is a new challenge. We develop an econometric method that tackles both issues given timing and information set assumptions. Using 15,079 unique public firms in the U.S. from 1975 to 2017, we find that cash flow remains a significant factor of investment even after controlling for productivity and that investment becomes less sensitive to q and more sensitive to cash flow.
[6] To Innovate or Not To Innovate When Times Are Bad
with Petra Sinagl
How are managerial incentives to innovate affected by financial crises? We study the role of managerial long-term compensation in inducing innovative output. We document that awarding managers with options during crises substantially increases their incentives to invest in risky projects and produce innovation. We find that an exogenous increase in CEO option pay awarded during times of high bank distress is associated with an increase in both the quantity and quality of innovation produced by the CEO's firm. In contrast, the same increase in option pay awarded during normal times does not have a significant effect on firm innovative output. We explain our results using Schumpeter's theory of creative destruction where managers exploit unique growth opportunities that arise during crises. Exogenous variation in option compensation is identified using pre-negotiated multi-year option plans.
[7] Disaster Risk, Politicians, Firms, and Capital Exuding: A New Role of Stock Market Participation
with Art Durnev
We propose a new function of stock market – to align voters’ preferences to politicians’ policies. We build a model with politicians’ ability to abate negative disaster shocks. Pro-business politicians are more likely to get re-elected when voters hold firm equity, and because of less severe disaster shocks, firms exude less capital and allocate investment more efficiently. We construct a novel stock market participation data for U.S. states using IRS statistics. We find that companies in states with higher stock market participation invest more efficiently and elect pro-business politicians. We use a novel neighboring states methodology and financial literacy instrument to eliminate endogeneity concerns.
Conference Presentations and Seminars
2024:
MFA", EasternFA (x2), California State University Fresno (scheduled), SEA-Korean AEA conference (scheduled)
2023:
AEA Poster Session, MFA", SFA, FMA, UMASS-Boston CSR Conference, University of Texas at Rio Grande Valley, 6th Erasmus Corporate Governance Conference*, Silicone Prairie Conference*, Federal Reserve Bank of Richmond*
2022:
FIRS Ph.D. session (accepted), EFA (Eastern), FMA Doctoral Consortium, FMA, SFA, The Fifth Conference on CSR, the Economy, and Financial Markets DePaul University, Nova SBE Finance Ph.D. Countdown, FMCG, FMCG Ph.D. Symposium, Gupta Governance Institute 15th Corporate Governance Conference New Ideas Session*, Silicon Prairie Finance Conference, AsianFA (x2), JFA-PBFJ (Japan), FMA European Doctoral Consortium, Iowa State University, University of Iowa (x2), Florida State University*, Academy of Finance (x2)
2021:
FMA (x3), FMA New Ideas Session, The 28th Finance Forum, Boca Corporate Governance Conference*, University of Iowa*, KAEA*, KEA (Korea)*, International Association for Applied Econometrics (IAAE-ASSA)*, Network Science and Economics Conference by NSF*, CEA (Europe/UK) x2
2020:
University of Iowa (x2)
(*presented by coauthors, " discussion only)
Editorial and Scholarly Services
External Reviewer:
Hong Kong Research Grants Council 2024, 2023
Ad hoc referee:
Journal of Empirical Finance (2024), Review of Industrial Organization (2022), Small Business Economics (2021), Review of International Business and Finance (2023), International Review of Finance (2022, 2021), Journal of Finance Issues (2023, 2022)
Program committee:
EFA (Eastern) 2024, 2023; FMA 2023, 2022; SFA 2023, 2022; FMA European 2022; FMA Middle East 2022; FMA Asia/Pacific 2022
Professional services:
Session Chair:
FMA 2023, EFA (Eastern) 2024, 2022, SFA 2022, FMA 2021
Discussant:
MFA 2024, 2023, EFA (Eastern) 2024, 2022, SFA 2023, 2022, FMA 2023, 2021 2020, UMass-Boston CSR conference 2023, FMCG 2022, AsianFA 2022, JFA-PBFJ (Japan) 2022, Academy of Finance 2022, CEA (Europe/UK) 2021