Caleb’s Research

Exploring how the world works

My published research covers a wide range of accounting, finance, and economics topics mostly in the areas of CEOs and firm-level disclosure and decision-making processes.

No News is Bad News: Local News Intensity and Firms’ Information Environments

Review of Accounting Studies, forthcoming.
Coauthored with Kristian Allee and Ryan Cating

With newspaper employment dropping precipitously in the last few decades, we posit that these changes will have a detrimental effect on local firms’ information environments. We find that volatility, spreads, and illiquidity increase as local newspaper intensity declines, and that this is associated with firms’ importance in their local economy. We further find that for firms that are more important in their community, or have busy analysts, less local newspaper intensity is associated with significantly lower analyst accuracy and higher forecast dispersion. This is consistent with local newspapers improving information environments, even for sophisticated and likely remote information intermediaries.

% Increase in All Jobs from 2001-2020: 11%
% Decrease in Newspaper Jobs from 2001-2020: 75%

Managers’ Strategic Use of Concurrent Disclosure: Evidence from 8-K Filings and Press Releases

The Accounting Review, forthcoming.
Coauthored with Brady Twedt and Jessica Watkins

We examines managers’ strategic use of concurrent disclosures. We find that managers disclosing negative 8-K news are more likely to issue a concurrent press release about an unrelated event in order to increase investor processing costs. We find that managers more commonly issue concurrent unrelated press releases when they have stronger incentives to impede the pricing of negative information, and that doing so is associated with a reduction in the speed with which prices reflect the news. Our findings shed light on a previously unexplored tool managers use to exploit investors’ processing capacity constraints to “hide” negative news.

% 8-Ks with a Press Release About the Same Event: 67%
% 8-Ks with a Press Release About a Different Event 33%
% Bad News 8-Ks with a Different Press Release: 53%
% Good News 8-Ks with a Different Press Release: 26%

The Power of Not Trading: Evidence from index fund ownership

Review of Accounting Studies, forthcoming.
Coauthored with Stephen Rowe

Compared to other owners, index fund managers face greater constraints and limitations when selecting portfolio investments and making trading decisions about whether, and when, to enter or exit a position. Using hand-collected data, we find that greater index fund ownership is associated with less bias and less obfuscation in financial reporting. Additional analysis finds results consistent with this effect being due to index funds wielding power through lower trading and not higher oversight.

S&P 500 Index Ownership in 2018: 17%
S&P 400 Index Ownership in 2018: 22%
S&P 600 Index Ownership in 2018: 25%

Geographic Connections to China and Insider Trading at the Start of the COVID-19 Pandemic

Review of Accounting Studies, forthcoming.
Coauthored with Erin Henry and George Plesko

We find that the sales of insiders at firms with connections to China were significantly more profitable during the COVID-19 crisis than the sales of insiders at firms without connections to China. Consistent with greater attentiveness to public information about the COVID-19 pandemic, this result is driven by China connected insiders executing larger (smaller) sales in the early (late) COVID-19 period than non–China connected insiders. China connected insiders avoided $375 million in aggregate losses by selling stock before the initial stages of the COVID19induced market decline.

Avg Trade Profits of China Connected Insiders: $251,000
Avg Profits of non-China Connected Insiders: $160,000

Manager Perception and Proprietary Investment Disclosure

Review of Accounting Studies, 2022.

I find that firms with overconfident CEOs provide significantly more R&D disclosures than firms without overconfident CEOs. This result is driven by observations where proprietary costs are more significant. Further, I find that the return on R&D is significantly lower when firms have more R&D disclosure. Collectively, these results suggest that manager perception of proprietary costs is an important determinant of firms’ voluntary proprietary disclosure.

% of CEOs Who are Overconfident: 34%
% Increase in R&D Disclosure if CEO is Overconfident: 19%

Bridging the Gap: Evidence from externally hired CEOs

Journal of Accounting Research, 2018.
Coauthored with Yonca Ertimur, Jonathan Rogers, and Sarah Zechman

We hand collect data for externally hired CEOs at public companies from 1992-2014 to examine the role of CEO employment gaps in the executive labor market. We find that CEOs with gaps have lower compensation and univariate evidence of a shorter time to turnover. Finally, we provide descriptive evidence on what executives do (e.g., sit on boards, work for private consulting companies, or consume leisure) during their gaps.

% of External CEOs With an Employment Gap: 58%
% of CEOs Who Consult During Gaps: 17%
% of CEOs Who Work for a Private Firm During Gaps: 41%
% of CEOs Who Are Board Members During Gaps: 61%