As regulators wrestle with disclosure standards for the burgeoning $35 trillion ESG investing industry—named for its focus on corporations’ environmental, social, and governance activities—a group of influential thought leaders is gathering at Berkeley Haas to share their expertise.
“The timing and the content of the conference are unique,” says Panos Patatoukas, associate professor of accounting at Berkeley Haas and faculty director of the Center for Financial Reporting and Management (CFRM), which organized the event. “Our set of panelists and moderators are at the cutting edge of the ESG investing world and represent a wide range of perspectives, including ESG strategies, scoring and indexing, investing, regulation, and sustainability reporting standards.”
The importance of measurement, standardization, and verification is becoming more urgent as ESG investing grows, and the amount of capital allocated in ESG indices and financial products has exploded. For example, the SEC recently fined Bank of New York Mellon over misleading claims about funds that use environmental and social criteria to pick stocks. A transparent standard setting process can play a crucial role in advancing the clarity that investors and businesses are asking for in the area of ESG disclosures, Patatoukas says.
ESG from four angles
The conference will approach ESG accounting from four main angles, Patatoukas says: disclosure, assurance, standardization, and valuation and investing. After an introduction from Dean Ann Harrison, the first panel will focus on measurement and disclosure, and will be moderated by James Webb, executive director of the CFRM.
Next, Andrew Behar, CEO of As You Sow, a nonprofit that uses shareholder advocacy to “create lasting change by protecting human rights, reducing toxic waste, and aligning investments with values,” will lead a discussion on ESG advisory and auditing, with partners from PwC, KPMG, Deloitte, and Moss Adams.
Berkeley Law Professor Stavros Gadinis will moderate two keynote addresses: SEC Commissioner Hester M. Peirce will speak on ESG reporting regulations, and Janine Guillot, CEO of the Value Reporting Foundation, will speak on reporting standards.
The afternoon discussion of ESG valuation and investing will feature AJ Lindeman, Bloomberg’s head of Index and ESG Research; Wall Street Journal Senior Columnist James Mackintosh, and Karen Wong, head of ESG & Sustainable Investing for State Street Global Advisors. Patatoukas will moderate.
The event, which is the 26th annual Conference on Financial Reporting, will run from 9 a.m. to 4 p.m. in Chou Hall’s Spieker Forum on the Haas campus.Registration is open to all. Attendees can receive CPA Continuing Education credits.
It’s been a decade since the Jumpstart Our Business Startups (JOBS) Act relaxed initial public offering requirements for companies with revenues under $1 billion, and a growing number of them have taken advantage of the option to disclose less financial information in their IPOs.
But while this reduced-disclosure provision may have helped stimulate the market, it came at the cost of lower IPO quality and more risk exposure for individual investors, suggests a new study by Berkeley Haas professors Omri Even-Tov and Panos Patatoukas, along with PhD candidate Young Yoon.
“The evidence shows that nearly two-thirds of the reduced-disclosure issuers underperform the market in the three years after they go public,” said Even-Tov, an assistant professor of accounting. “While we find evidence that institutional investors use publicly available information to avoid the worst-performing IPO stocks, individual investors tend to ignore fundamentals when investing in IPO stocks and are more exposed to the risks.”
Even as Senate Republicans have unveiled a new set of relaxed rules dubbed JOBS Act 4.0 to spur business and ensure retail investors have access to young ventures, “the evidence questions that the SEC’s objective to increase the quantity of IPOs came at the expense of quality,” said Patatoukas, associate professor and L.H. Penney Chair in Accounting. Based on their findings, the researchers argue that the SEC should ratchet back and require all IPO issuers to disclose at least three years of audited financial information—up from the two years allowed under the JOBS Act.
“We recommend that regulators balance the benefits of increasing the number of IPO registrants against the costs of enabling speculative issuers to go public with reduced financial disclosures,” Patatoukas said. “With respect to investor protection in the IPO aftermarket, the quality of IPOs is as important, if not more so, than the quantity.”
Stimulating the IPO market
When the JOBS Act was signed into law on April 5, 2012, the goal was to invigorate the IPO market by making the process less risky and burdensome for smaller companies. The Act created a new category called emerging growth companies (EGCs), defined as issuers with pre-IPO revenues of less than $1 billion.
The new rules gave companies the option of presenting just two years of audited financial statements and selected financial data in their IPO filing, rather than the three years of audited financials and five years of selected financial data required previously.
By the end of 2015, almost half of emerging growth companies with an operating history of more than two years opted for reduced disclosures. By 2018, it was over 80%.
Quantity vs. quality
While prior studies have found that the JOBS Act did lead to an increase in the number IPOs—which had dropped off following the dot-com bust—the Berkeley Haas researchers questioned their quality.
They looked closely at EGCs that went public before and after the JOBS Act took effect, and also compared them to companies with revenues over $1 billion that went public during the same time period and did not have the option of reduced disclosures.
The EGCs that had been operating more than two years, yet opted to release only two years of financials, had more speculative valuation profiles and lower institutional ownership, they found. These companies’ stocks tended to become overpriced in the aftermarket, and after three years, 66% of them underperformed a broad market index—compared with 49% of emerging growth companies that chose to disclose three years of financials.
They also found that individual investors were more attracted than institutions to the speculative, “lottery-type” companies that went public under the new rules, implying that individual investors were more exposed to the downsides.
Their findings contradict prior research suggesting that the Act led smaller companies to underprice their IPOs. Rather, the analysis found that the bigger average jumps in share prices relative to offering prices after the Act was passed were due to overall market conditions, and weren’t limited to EGCs.
Enhancing companies’ access to the public capital market, and their ability to conduct successful IPOs, gives investors more opportunities to invest in public companies, the researchers agreed. Yet the increased risk that the reduced accounting rule brings to individual investors led them to recommend that the SEC remove the provision and require issuers to disclose at least three years of audited financial statements.
“Having three years of data rather than two will enable investors to gauge the trend in company growth leading to the IPO,” Even-Tov said. “This has the potential to help level the playing field for Main Street investors, and the incremental cost to companies of providing another year of historical information should be small.”
Patatoukas added that the findings have direct relevance for both the SEC and for retail investors.
“Our evidence that individual investors may have been disproportionately exposed to shareholder value destruction post-JOBS Act could inform the SEC’s efforts to facilitate capital formation while protecting the interests of Main Street investors,” he said. “On the part of Main Street investors, our evidence calls attention to the risks of actively targeting IPO stocks with speculative valuation profiles.”
Spring 2022|By Katie Gilbert| Photo: GUY OLIVER/ALAMY STOCK PHOTO
The impact of sourcing responsible minerals
An ambitious change in U.S. accounting rules appears to be helping reduce violent conflicts in Africa, according to a new study.
The conflict minerals disclosure rule, or Dodd-Frank’s Section 1502, has required companies as of 2014 to publish detailed reports on their sourcing of tantalum, tin, tungsten, and gold. These so-called 3TG, or “conflict minerals,” used in smartphones, laptops, electric vehicles, and other devices, have fueled a humanitarian crisis by serving as a major source of revenue for armed groups in Central Africa.
“With Dodd-Frank, the SEC made an unprecedented move by requiring disclosures intended to tackle issues outside of the shareholder-protection realm,” says Assistant Professor Omri Even-Tov, co-author of the study.
The U.S. government’s response focused on transparency rather than sanctions. The hope was that if consumers, investors, employees, and other stakeholders knew more about the conflicts linked to the mining of minerals in the devices they use every day, they would push companies to change their supply chains and, more importantly, that the changes in companies’ mineral-sourcing decisions would help alleviate the conflicts.
It seems to be working, Even-Tov found.
Analyzing data from the first four years after the disclosure requirement was enacted, Even-Tov, along with Seoul National University Professor Bok Baik and others, found that companies became substantially more responsible in sourcing minerals. What’s more, their analysis found that the number of conflicts decreased.
The researchers collected data from over 4,000 minerals disclosure reports published by more than 1,000 companies between 2014 and 2018. Over the four-year period, responsible sourcing nearly doubled, increasing from 45% to almost 82%.
Even though companies were not penalized for continuing to buy conflict minerals, the researchers found that public attention made companies more committed to responsible sourcing. For every 100 downloads of a company’s disclosure report, they noted a 1.2% increase in the percentage of conflict-free smelters and refiners and a 4.5% increase in the likelihood that a company would put in place a policy for avoiding conflict minerals.
Market reaction also appeared to play a role. In the five days surrounding the publication of a disclosure report, Even-Tov found that a one standard-deviation increase in the number of conflict-free smelters and refiners that companies sourced from (which amounted to a 24% overall increase) was associated with a bump of about 0.6% in market value, which equates to $66 million for the average company in the sample.
To determine the humanitarian impact, the researchers drew from the Armed Conflict Location & Event Database to obtain the dates, locations, and types of conflict events between 2010 and 2019.
They found that the number of conflicts decreased by 15% in the mining regions of the Democratic Republic of Congo and the nine neighboring countries covered by the disclosure rule, relative to countries not covered. They also found that conflicts had not spilled over into non-mining areas.
“I don’t want anyone to think that the conflict minerals disclosure rule is a panacea; it’s not,” says Even-Tov. “But our results show that increased transparency is effective at nudging companies toward responsible actions that are having a real impact.”
He even thinks that the policy should be applied more broadly. For example, the Democratic Republic of Congo supplies most of the world’s cobalt, a mineral not currently mentioned in the rule. He believes it should be added.
Still, Even-Tov acknowledges the need for policymakers to strike a delicate balance with laws requiring more disclosure. “It’s easy to ask companies to disclose more,” he adds, “but what’s crucial is to measure the impact the disclosures have. That’s what we, as accountants, are endeavoring to do.”
An ambitious change in U.S. accounting rules appears to be helping to reduce violent conflicts in Africa, according to a new study.
The conflict minerals disclosure rule, or Dodd-Frank’s Section 1502, required companies as of 2014 to publish detailed reports on their sourcing of tantalum, tin, tungsten, and gold. These so-called “conflict minerals,” used in smartphones, laptops, electric vehicles, and other devices, have fueled a humanitarian crisis by serving as a major source of revenue for armed groups in Central Africa.
“With Dodd-Frank, the SEC made an unprecedented move by requiring disclosures intended to tackle issues outside of the shareholder-protection realm,” says Omri Even-Tov, an assistant professor of accounting at the Haas School of Business, University of California Berkeley, and co-author of the study.
The hope was that if consumers, investors, employees, and other stakeholders knew more about the conflicts linked to the mining of minerals in the devices they use every day, they would push companies to change their supply chains—and more importantly, that the changes in companies’ mineral-sourcing decisions would reduce funding streams and help alleviate the conflicts.
That seems to be the case. Based on data from the first four years after the conflict minerals disclosure requirement became effective, Even-Tov and colleagues found that companies became substantially more responsible in sourcing minerals. What’s more, their analysis found that the number of conflicts decreased by 15% in the mining regions of the Democratic Republic of Congo and the nine neighboring countries covered by the disclosure rule, relative to those of countries not covered.
“I don’t want anyone to think that the conflict minerals disclosure rule is a panacea; it’s not,” says Even-Tov, who conducted the study with Bok Baik, a professor at Seoul National University, and PhD students Russell Han, of the University of Illinois at Urbana-Champaign, and David Park, of Seoul National University. “But our results show that increased transparency is effective at nudging companies towards responsible actions that are having a real impact.”
Shifting toward “conflict-free”
The Enough Project, a nonprofit that advocated for Section 1502, estimates that in 2008, a couple of years before the disclosure rule was passed, armed groups in Central Africa earned $185 million from gold as well as tantalum, tin, and tungsten—together known as 3TG minerals.
Rather than impose sanctions on any country or industry, or directly penalize companies sourcing conflict minerals, the U.S. Congress opted to ratchet up transparency. Section 1502 requires SEC-listed firms to file conflict minerals disclosure reports that reveal whether they source 3TG minerals from the Democratic Republic of Congo or any of its nine neighboring countries.
The researchers collected data from over 4,000 minerals disclosure reports published by more than 1,000 companies between 2014 and 2018. Because of the conflict minerals disclosure rule, operators of smelters and refiners tend to know about the origins of the minerals they work with and third-party auditors can flag them for links to conflicts or label them as “conflict-free.” Companies are required to conduct due diligence on their supply chains and disclose their findings such as the proportion of conflict-free smelters and refiners in their supply chains.
Responsible sourcing—as measured by the percentage of conflict-free smelters and refiners—improved every year, the researchers found. Over the four-year time period, it nearly doubled, increasing from 44.6% to almost 82%.
Protecting against reputational costs
That raised another important question: Without an enforced penalty for companies that continued to source conflict minerals, what explains such a dramatic shift in behavior?
“We thought it was possible that this came down to perceived reputational cost, which means that employees of the company, customers of the company, and shareholders of the company could be applying pressure,” Even-Tov says.
The researchers found that the more public attention a company’s conflict minerals report garnered, the stronger its commitment to responsible sourcing became. For every 100 downloads of a company’s conflict minerals report, they noted a 1.2% increase in the percentage of conflict-free smelters and refiners and a 4.5% increase in the likelihood that a company would put in place a policy to disassociate from conflict minerals that fund armed groups.
Market reaction also appeared to play a role. Looking at market value over the five days surrounding the publication of a disclosure report, Even-Tov and colleagues found that a one standard-deviation increase in the percentage of conflict-free smelters and refiners that companies sourced from (which amounted to a 24.2% increase the proportion of conflict-free smelters/refiners they used) was associated with a bump of about 0.6% in market value. That equates to $66 million boost for the average company in the sample.
The humanitarian impact
The next question they dug into was whether the new rule was having any bearing on its humanitarian goal of reducing bloodshed. To find out, the researchers drew from the Armed Conflict Location & Event Database to obtain the dates, locations, and types of conflict events between 2010 and 2019.
They divided the entire continent of Africa into roughly ten thousand subnational units and compared changes in conflict incidence around mining areas within covered countries to those in countries not covered by the rule. Conflicts in covered countries’ mining regions fell by an average of about 15% after the disclosure rule went into effect, relative to non-covered countries’ mining regions. They also found that conflicts had not spilled over into non-mining areas.
Transparency’s Delicate Balance
Even-Tov points to these results as robust evidence that the conflict minerals disclosure policy works—and that it should be applied more broadly. For example, the Democratic Republic of Congo supplies most of the world’s cobalt, a mineral not currently mentioned in the rule. He believes cobalt should be added as a conflict mineral.
Still, he acknowledges the need for policymakers to strike a delicate balance with laws requiring more disclosure.
“The problem is that disclosure rules don’t come without costs,” Even-Tov says. “There’s the cost of disclosure for companies and that trickles down to consumers. I think we need to consider the costs when we ask for more disclosures.”
“It’s easy to ask companies to disclose more,” he adds, “but what’s crucial is to measure the impact the disclosures have. That’s what we, as accountants, are endeavoring to do.”
The average transaction fee paid by retail investors to buy or sell corporate bonds fell 5% after regulators forced brokers to disclose these fees, according to new research co-authored by Berkeley Haas Asst. Prof. Omri Even-Tov.
The fee disclosure, which brokerage firms fought for about two decades, finally took effect for some corporate and municipal bond trades in 2018. This paper is the first academic research to examine its impact on trading costs for corporate bonds, and the findings highlight the need for regulators to provide better disclosures to retail investors, Even-Tov said.
“If their fees were fair before this, we shouldn’t have seen any effect, but we do find a reduction,” he said. “They were charging higher fees than they should have been.”
If their fees were fair before this, we shouldn’t have seen any effect, but we do find a reduction…They were charging higher fees than they should have been. —Asst. Prof. Omri Even-Tov
When companies sell bonds to investors, they are borrowing money. After they have been issued, these bonds are bought and sold “over the counter,” between broker-dealers who trade them with their clients. When a broker charges a client more than the prevailing market price, it’s known as a markup. The difference represents the broker’s profit and the client’s trading cost—akin to a commission.
Until recently, investors had no easy way to know how much they were paying their brokers because the markup was not disclosed; it was embedded in the bond’s price. For example, an investor might have seen that they paid $102.50 for the bond, but not that the firm had purchased it for only $100.
Knowledgeable investors could estimate the markup by looking up the bond’s trading history in a database known as Trace—short for Transaction Reporting and Compliance Engine. They could then negotiate with their broker for a lower markup.
“However, estimating markups imposes information processing costs on investors, potentially creating information asymmetry between unsophisticated investors and bond-market professionals,” wrote the authors, who include Christine Cuny of New York University’s Stern School of Business and Edward Watts from the Yale School of Management.
New disclosure rule
In 2016, the Financial Industry Regulatory Authority, Wall Street’s self-regulator, adopted a rule that required broker-dealers to disclose their markups when they buy corporate bonds and sell them to retail (non-institutional) investors the same day. Brokerage firms take little risk of losing money on same-day trades. The disclosure applied to such trades starting in May 2018.
These markups appear in the confirmation investors receive after they’ve made the trade. That’s too late to negotiate a lower commission, but it could lead customers who previously didn’t know how big these markups are “to reevaluate their brokerage relationship.” Even-Tov and his co-authors wanted to know whether this had led brokers to reduce markups on trades subject to the disclosure.
To test this hypothesis, they used Trace to examine retail-size trades—which they defined as trades of $100,000 or less—during the six months before and six months after the rule took effect. They calculated the markup as the total cost that investors would incur to buy and sell a bond.
On average, they found the markup on same-day retail trades declined by about 5% compared to trades not subject to the disclosure, or from about $431 to $409 on a $50,000 trade, Even-Tov said.
The reduction was larger than average for the smallest trades. “These trades are likely executed by unsophisticated investors who have a limited supply of information processing capacity,” the authors wrote. They also found that the reduction in markups was more pronounced for less-liquid bonds, such as high-yield, long-duration and smaller issues.
Lower costs for consumers
Consumer groups had argued that this long-overdue rule change would give retail investors more information to make better decisions and foster increased price competition. The securities industry had contended that the implementation costs would be significant and passed on to investors. The authors said the 5% savings they observed was after any costs passed to customers.
Markups are large “because frictions in the over-the-counter bond market enable market professionals to take advantage of uninformed investors,” the authors wrote.
“Our findings show that disclosure requirements function as a regulatory tool, and constrain financial professionals’ opportunistic behavior,” Even-Tov said.
The paper, entitled “From implicit to explicit: The impact of disclosure requirements on hidden transaction costs,” is forthcoming in the March edition of the Journal of Accounting Research. Read it online here.
A new study has found compelling evidence that some credit rating analysts leak information about upcoming rating changes to Wall Street to advance their careers.
The paper, co-written by Omri Even-Tov of Berkeley Haas and Naim Bugra Ozel of the Wharton School and the University of Texas at Dallas, highlights a potential concern for investors, credit issuers, and the Securities and Exchange Commission, tasked with ensuring fair rating information to all market participants. The paper is forthcoming in the Review of Accounting Studies.
“Our evidence suggests that some rating analysts share confidential information about upcoming rating changes with institutional investors, for whom they later go to work,” said Even-Tov. “This is not only problematic for investors whose trades may be front-run by those with advance knowledge of rating changes, but also for credit issuers who share private information with the credit agencies, since it may not stay private for long.”
Our evidence suggests that some rating analysts share confidential information about upcoming rating changes with institutional investors, for whom they later go to work.
Price movements before announcements
Even-Tov and Ozel examined how companies’ stock prices fluctuate before public announcements of their credit ratings. They found that stock prices start moving in the direction of upcoming downgrade announcements even when there is no other news about the stock.
“Before rating agencies make public announcements about rating changes, they first privately notify the issuing company,” Even-Tov says. “We set out to study whether there is informed trading between the private notification and the public announcement, which is typically no more than 48 hours.”
The researchers examined more than 1,000 credit rating change announcements from the three major reporting agencies—S&P, Moody’s, and Fitch—between 2001 to 2017. They combined this with data on intraday stock returns, which allowed them to see how stock prices fluctuated within short time periods.
In line with prior research, they found significant, but modest, stock price changes immediately after credit rating announcements, particularly for rating downgrades. In the two hours following a downgrade announcement, stock prices declined by between 0.1% and 0.9%. Stock prices increased by about 0.1% to 0.2% following a rating upgrade.
Interestingly, these returns were modest in part because of large stock movements that came before the official rating was publicly announced. In the 48 hours before an announcement—a period when the rating report is typically finalized and forwarded to credit issuers for review before publication—they found that stock prices declined by up to 1.5% for a rating downgrade and increased by up to 0.4% for a rating upgrade. Institutional investors tend to be net sellers in the 48 hours ahead of downgrades.
Even-Tov and Ozel looked at the factors that might explain these pre-announcement stock returns and whether there was any evidence of informed trading. Many rating announcements occur after other important corporate news events, such as earnings or merger announcements, which could drive stock price changes. When the authors removed such announcements from their data, they still found significant price changes within the 48-hour pre-announcement window (and not prior to that period).
They then looked at whether investors may have anticipated credit rating announcements based on other publicly available information. They found that corporate news and investor anticipation explained pre-announcement movements for rating upgrades, but still could not fully explain stock movements before rating downgrades.
Looking for signs of informed trading
A third explanation for stock movements immediately prior to rating announcements is that some form of informed trading is occurring. This is of course illegal, and insider trading can lead to financial penalties or jail time.
Even-Tov and Ozel scrutinized the analysts named in credit announcements and whether they possibly passed along information to institutional investors. They separated out those who stayed with their credit agencies from those who later switched jobs to an asset management firm. They found that pre-announcement returns are significantly stronger when one or more of the credit analysts who prepared the report later pursues a career in the asset management industry. In those cases, stock returns were 2% lower in the 48-hours before the downgrade announcement. Moreover, they also found that institutional investors are those who benefit in these cases—they are net sellers. In contrast, they found insignificant returns if the analyst stayed with the reporting agency.
In contrast, they did not find any evidence that insiders from the issuers traded on information about upcoming rating changes—in fact, they found that insiders generally reduce their trading in the sensitive period ahead of downgrades, perhaps out of fear of running afoul of regulators. That further implies that the leaked information from analysts drives stock returns.
Our paper shows yet another example of the revolving door on Wall Street, which should draw the attention of the SEC and credit agencies.
“Our paper shows yet another example of the revolving door on Wall Street, which should draw the attention of the SEC and credit agencies,” says Even-Tov.
This fall, Berkeley Haas welcomes a diverse and international group of nine new professors, including a record five women. The new faculty members include one full professor, two associate professors, and six new assistant professors, who are from Italy, Argentina, France, China, Canada, and California.
In addition to the new professors, seven new lecturers have joined the professional faculty to teach classes in various programs.
Associate Professor Matilde Bombardini, Business & Public Policy
Though Matilde Bombardini grew up in Imola, a city in Northern Italy, UC Berkeley has long had a special place in her life and career. It’s where she came as an undergraduate student on an exchange program in 1998-99.
“I took a graduate course in the Economics Department that opened the door for me to pursue a PhD at MIT (Massachusetts Institute of Technology). Professor David Romer was one of my letter writers for PhD admission,” she said. Bombardini earned her PhD from MIT in 2005.
Before coming to Berkeley, she was an associate professor at the University of British Columbia’s Vancouver School of Economics.
Bombardini is conducting ongoing research on the role of corporate charity as a channel for influencing regulation, and as a tool for political influence in general. She is also researching the role of politicians’ information in congressional voting on China’s Normal Trade Relationship with the U.S.
In her free time, Bombardini likes to ski, sail, hike, and enjoy the outdoors. “I am eager to explore the Tahoe area ski slopes, and the good weather in the Bay Area will make it easier to go back to sailing.” She is a beginner electric guitar player and likes all rock music.
Professor Francesco Trebbi, Business & Public Policy
As a child in Italy, Francesco Trebbi played basketball on a kids’ team with Kobe Bryant, whose father was a star in the city’s basketball team at the time. An athletic career did not prove as promising as his ventures in economics have been, however. “Our team lost even with Kobe on our side, so you can just imagine how bad of a basketball player I must be!” said Trebbi.
Instead, Trebbi attended Italy’s prestigious Bocconi University, earning a degree in political economy, before going on to receive his MA and PhD in economics from Harvard University.
Before joining Berkeley, he was the Canada Research Chair and professor of economics at the University of British Columbia Vancouver School of Economics, and an assistant professor of economics at the University of Chicago Booth School of Business.
Trebbi’s academic research focuses on political economy and applied economics. He has studied the design of political institutions, elections, political behavior, campaign finance, lobbying, and financial regulation. He has also worked on the political economy of development, ethnic politics, and conflict. His primary teaching interests are in political economy, applied economics, and applied econometrics. Currently, he is working on new empirical approaches to the study of behavior of government officials, voters, and special interest groups. He also maintains an active research program on the political economy of non-democratic and low-income countries.
Trebbi also has an artistic streak. “I have only one modest talent outside of economics: I paint. Non-figuratively. Many economists I know have been inflicted with one canvas or two, which I think they keep in their homes and offices out of affection,” he said.
Associate Professor Ricardo Perez-Truglia, Economic Analysis and Policy
Ricardo Perez-Truglia grew up in the Ciudadela neighborhood near Buenos Aires, Argentina, moving to the U.S. for a PhD in economics from Harvard University. He joins Berkeley Haas from UCLA’s Anderson School of Management, where he was an assistant professor of economics for four years.
As a behavioral economist, one of Perez-Truglia’s main research interests is how social image and social comparisons shape economic behavior: What do others think of you? Are you rich? Smart? Hard-working? The desire to shape these opinions is a powerful driver of human behavior, he said.
His research often involves collaborating with private and public institutions, sometimes using large datasets to study the effects of policies, or conducting large-scale field experiments with their clients or employees. He studies a range of topics such as transparency, tax collection, and macroeconomic expectations. “My research is intended to inform firms and policy makers in the developed and developing world, leading to practical applications,” he said.
Perez-Truglia says he would be happy to talk to students about economics and social science research as well as two more personal topics: “I’m familiar with the challenges associated with being an immigrant and a first-generation college graduate, so I’m happy to discuss them with any of the Berkeley students who are facing the same or similar challenges.”
He’s also happy to talk about Latin America—and his favorite sport, fútbol or soccer. “I’d love to play soccer with the students if they want. I am a huge soccer fan—my favorite teams are River Plate (from Argentina), FC Barcelona (Spain) and obviously, I care the most about the Argentine national team.”
Assistant Professor Sydnee Caldwell, Economic Analysis & Policy
Sydnee Caldwell, who grew up in Fallbrook, Calif., is coming “home” to Cal. She graduated from UC Berkeley with a double bachelor’s degree in applied mathematics and economics in 2008, before earning her PhD in economics from MIT in 2019. She joins Berkeley Haas after serving a year as a post-doctoral researcher at Microsoft Research New England.
Caldwell’s research focuses on topics of labor and personnel economics, and she is currently interested in how firms find and recruit new employees. She has also conducted research on the gender-wage gap, recently examining how it plays out in the gig economy. In a paper forthcoming in American Economic Journal: Applied Economics, she looks at the differences between taxis and ridesharing services like Lyft and Uber from the driver’s perspective.
She says students should feel free to come to her with any questions they have about economics or data science, regardless of whether they are in her data and decisions class. “I am always interested in how companies and people use data to make decisions,” she says.
She’s also looking forward to hiking and skiing and spending more time outside now that she’s back in the Bay Area.
Assistant Professor Solène Delecourt, Management of Organizations
Solène Delecourt hails from Lille, a city at the northern tip of France. She earned her PhD in organizational behavior at the Stanford Graduate School of Business.
Delecourt’s research centers on inequality in business performance. She is passionate about using rigorous social scientific theories and methods to delve deeply into this phenomenon, particularly among entrepreneurs in emerging economies. Her research agenda focuses on what drives variation in profits across firms, and how to reduce inequality in business performance among entrepreneurs in different market settings—including India, Uganda, and the U.S. In the three papers that made up her dissertation, Delecourt used field experiments to understand how business characteristics, client search behavior, and peer-to-peer advice among entrepreneurs affect business success.
Delecourt wants students to feel free to come to her for discussions. “I would love to hear about their projects, especially as they relate to issues of gender inequality,” she said.
In her free time, she enjoys swimming and is excited for the numerous outdoor pools on campus. She also loves good bread and pastries and cannot wait to try out Fournée Bakery.
Assistant Professor Douglas Guilbeault, Management of Organizations
Douglas Guilbeault is from Tecumseh, a small town in Southwestern Ontario, Canada. He received his PhD in 2020 from the Annenberg School for Communication at University of Pennsylvania.
Guilbeault studies how people build shared concepts as they communicate in daily life, specifically within social networks and organizations. “Big problems on my list to tackle are: bias reduction in crowdsourcing, cross-cultural concept translation, equitable content moderation over social media, and enhancing scientific discovery,” he said.
Guilbeault is developing a computational theory of how categories emerge, grow, and evolve in social systems, as well as how categories shape social systems themselves.
Guilbeault looks forward to meeting his new colleagues. “I am most excited by the dynamic network of colleagues that I will get to exchange ideas with and learn from,” he said. “The Management of Organizations group at Haas is absolutely distinct in its integration of both macro and micro perspectives on organizations, and my work explores this interface.”
When he’s not conducting research or teaching, Guilbeault makes music and writes software that produces digital art. He also loves running, biking, hiking, and seeing live music.
Assistant Professor Xi Wu, Accounting
Xi Wu is originally from Beijing, China. She received her PhD in accounting from New York University’s Stern School of Business after studying mathematics and economics as an undergrad at Cornell University.
Wu’s research focuses on the intersection of securities regulation, corporate governance, and valuation. Her current research studies how regulations affect firms, how managers and creditors use information to address agency issues, and how to use newly-available data to value firms and cryptocurrencies. Her recent work shows that more heavily regulated companies fare significantly better during extreme economic downturns—including the coronavirus pandemic.
Since she is currently studying the valuation of cryptocurrencies and the market of initial coin offerings (ICOs), Wu says that being close to both the San Francisco Bay Area and the Silicon Valley is of huge value to her, and she is excited about the potential of connecting fintech research to the practical world.
Wu enjoys hiking and skiing in her free time.
Assistant Professor Luyi Yang, Operations & Information Technology Management
Luyi Yang, a native of Shanghai, China, joins Haas from Johns Hopkins University, where he was an assistant professor at the Carey Business School for the past three years. He received his PhD from the University of Chicago Booth School of Management in 2017.
Yang’s work is focused on developing new theories for understanding emerging business models and policy initiatives in service operations. On the business front, he has studied innovative mechanisms for managing queues—which are often a key feature of service systems—such as line-sitting, mobile ordering, and referral priority programs. On the policy front, he has studied the welfare implications of expanding patient choice in elective surgeries, as well as the pricing and environmental implications of the right-to-repair legislation, which gives consumers the ability to repair and modify their own consumer electronic devices.
Yang is excited to experience the innovative culture of Haas. He said students should come talk to him about their startup ideas and new business models. “Over the years I have engaged many startups in my research and teaching. If you have an innovative idea to start a new business, we should talk!” Yang said. In his free time, he likes travelling and hiking.Assistant Professor Biwen Zhang, Accounting
Biwen Zhang is from Nanchang, the capital and largest city of Jiangxi Province, China. She completed her PhD in accounting in 2020 from Simon Business School at the University of Rochester.
Her main research interests are in the areas of financial intermediaries and corporate governance. Specifically, her current research revolves around the economic implications of conflicts of interest faced by capital market participants.
In her free time, Zhang likes to play table tennis and badminton.
New Professional Faculty
New lecturers this fall include Ahmed Badruzzaman, Deborah Krackeler, Don Hanna, and Sachita Saxena, who will each teach a course in the Undergraduate Program; James Zuberi, who will teach a course in the Executive MBA Program; and Temina Madon, who will teach in the Full-time MBA Program. Sasha Radovich will join in the spring to teach a class in the Undergraduate Program.