PHD Publications

Three chapters are included in my dissertation. These three chapters concern the interplay between national security policies and corporate behavior. The first chapter focuses on corporate investment. The second chapter examines financial analysts behavior. The third chapter investigates information exchanges within the sovereign debt market. This dissertation sheds new light on the consequences of this relevant but unexplored policy area.Keywords : national security, corporate investment, banks

The main objective of this dissertation is to investigate how organizational governance affect the performance of nonprofit and hybrid organizations tackling Grand Challenges. I explore how nonprofit organizations and cross-sector collaborations can take advantage of innovative governance systems to be more effective at social value creation. The first essay examines the effectiveness of a bundle of governance mechanisms consisting of social performance-based incentives combined with auditing and feedback in a randomized governance program conducted in the Democratic Republic of Congo’s healthcare sector. I found that within ten quarters following the treatment, nonprofit health centers experienced significant improvements in operating efficiency and social performance. Additionally, analysis reveals that funding is not a substitute for governance. Indeed, health centers that only receive lump sum funding increase their scale but do not improve operating efficiency nor social performance. In contrast, health centers receiving funding and governance treatment enhance their scale, operating efficiency, and social performance. The second essay investigates how board composition affect nonprofit organizational effectiveness. I investigate the underserved context of the Democratic Republic of Congo, which is ranked among the most gender unequal areas in the world. I find that female leadership and gender diversity have a positive and significant correlation with organizational effectiveness, proving that governing bodies are major determinants of organizational performance. Even more, we highlighted the mediating role of board meeting frequency in the gender diversity-effectiveness link, exhibiting a mechanism through which governing bodies influence organizational performance. The third essay theorizes on the governance trade-off dual-purpose public-private collaborations face as they create and distribute value. It sheds light on the role of partners’ capabilities, stakeholder orientation, and social purpose centrality as key determinants of the most suitable partnering mode. Overall, the findings of my three essays show that governance plays a critical role in fostering social value creation, tackling Grand Challenges, and can contribute to attaining the United Nations Sustainable Development Goals.

This thesis contains three chapters which investigate how new developments affect financial outcomes. The first two chapters study digitalization within firms and the impact of being user-focused for these firms. The third chapter explores the phenomenon of ESG ratings for firms. The first chapter examines whether digitalization is priced in stock markets. I build a dynamic measure of digitalization that encapsulates a firm’s exposure to computers, data analytics, and programming. I find that this measure predicts stock returns beyond well-known predictors. This digital alpha is concentrated in firms which focus on users, where it averages 9.0% in annual realized excess returns over the past two decades. This figure likely compensates for risk, as user-focused digital firms have greater systematic risk. The second chapter focuses on these user-focused digital firms during the COVID-19 crisis. This setting is particularly suitable since the COVID-19 crisis catalyzed a shift from the offline world to the online world. I find that when firms are more digital, being userfocused drives increased search interest to these firms in the months following COVID-19’s arrival, which translates into better real performance through higher return on assets. Correspondingly, these firms experience relatively higher abnormal stock returns during this period. In the third chapter, I document that upwards of 40% of public firms in the U.S. do not have any ESG scores. Smaller or more financially constrained firms are less likely to receive scores. Firms which receive ESG scores for the first time enjoy higher employment, sales, and investment, as well as lower leverage and financial constraints. Hence ESG scores act as a club where new membership brings benefits.Keywords : digitalization, users, Google search, ESG

In my first paper, I study the spillover effects of removing barriers to growth in one product market on entry and growth of firms in the downstream market. Firms that are constrained produce low quality goods and, in turn, constrain the downstream market. I exploit the repeal of product reservation in India, whereby hundreds of products stop being reserved for exclusive production by small firms. With a more efficient input market, entry in the downstream product market increases with no observable decline in quality of entrants. Productive downstream firms grow and less productive ones shrink. My results imply that business dynamism has positive spill-over effects along the supply chain. In another paper, I study the process of creative destruction and whether incumbents faced with displacement risk continue to innovate. To do so, I construct a measure of displacement risk using patent text similarity measures. Theory predicts that threat of technologically advanced entry incentivises firms closer to the frontier to catch up but may discourage innovation in firms further away from the frontier. As predicted by theory, firms far away from the frontier decrease their investment in R&D when faced with displacement risk. At the same time, I find that ex-ante low productivity firms are not more likely to exit than ex-ante high productivity firms. Moreover, while firms far away from the frontier reduce in-house R&D spending, they are more likely to engage in mergers and acquisitions and invest as corporate venture capitalists. My findings suggest that upon facing displacement risk, firms regain their innovation edge by investing outside the boundaries of the firm. In a third paper, my co-authors and I investigate the role of banks in propagating the negative effects of large corporate bankruptcies to the real economy. Banks that suffer from large corporate bankruptcies on their loan portfolio increase loan spreads in subsequent commercial lending. The effect persists after controlling for borrower risk, industry and geographical contagion. The effect does not manifest via deterioration of the bank’s balance sheet, loss of reputation or bank learning about its screening ability. Rather, it stems from earnings management by the bank and disproportionately affects small firms with fewer outside options for raising financing. Overall, our findings suggest that banks play an important role in disseminating microeconomic shocks.Keywords : Innovation, entrepreneurship, bankruptcy, barriers to growth

My thesis focuses on investigating the role of different aspects of emotions in influencing social media (SM) user engagement. In particular, I investigate how various emotional attributes of SM content, which are enabled by novel SM capabilities, influence user engagement with various types of content such as text, image, and video. The first essay examines the influence of dissonance between the sentiments embedded in the visual and textual content of multimodal SM posts on user engagement. In this essay, I leverage cognitive dissonance theory to propose the construct of sentiment dissonance and empirically examine its influence on user engagement with SM posts. Building on the SM post-level analysis of the first essay, the second essay investigates the SM profile-level time-varying attributes of emotions alongside their SM post-level attributes. Specifically, I examine the influence of dynamic emotional variation across SM profiles through the tenets of emotion dynamics theory and affect theory of social exchange to evaluate the influence of time-varying features of emotions in SM profiles on user engagement. By so doing, I intend to better understand the influence of dynamic and static emotional attributes in SM profiles on the magnitude and longevity of user engagement with SM posts. Extending prior essays to the novel context of SM video advertisement, the third essay leverages the time-varying attributes of emotions to examine the mechanisms through which the continuous emotional expressions in advertisement videos influence user engagement. Specifically, building on emotion dynamics and capacity theory of attention, I examine the variability and predictability of emotions in SM advertisement videos through constructs of emotional variability and emotional inertia. The findings of this study will help us better understand how the emotional attributes of videos impel users to watch and engage with the advertisement videos. Keywords: Social media, user engagement, emotion, sentiment dissonance, emotional inertia, emotional variability

Abstract : Classic literature in labor economics and economic sociology has documented how managerial careers are shaped by internal labor markets and organizational division of labor. Yet the last three decades have been marked by a dramatic increase in external hiring, proliferation of new forms of employment, and the emergence of career histories that span multiple employers, industries, and occupations. This means that our understanding of intra- and inter-firm mobility of managerial workers in modern labor markets might be incomplete. In my dissertation, I explore how managers move between jobs and assignments, how organizations make their choices in filling vacant positions, and how market intermediaries shape talent flows and individual careers. I focus on functional (occupational) dimension of managerial experience. I aim at demonstrating how experience in many vs. one (or few) functions influences career outcomes for middle managers in internal and external labor markets. I concentrate on two mechanisms by which spanning functional boundaries might shape one’s subsequent mobility: (1) skills acquisition and transferability and (2) career history as a signaling device. In the first chapter, I investigate how experience in multiple functions impacts transition into management and promotions from lower to higher management within a single organization, where information asymmetry about actual workers’ abilities is less pronounced and, therefore, signaling is less likely to play a role. This project contributes to the literature on managerial careers and studies of internal labor markets by highlighting the multi-dimensionality of managerial experience and demonstrating how horizontal mobility shapes vertical mobility in organizations. In the second chapter, I study whether functionally diverse or focused profiles are more appreciated in the mediated labor market for middle management jobs, where both learning and signaling mechanisms are likely to be at work. This setting allows me to introduce the effect of the relative candidate evaluation, i.e., the structure of the candidate pipeline. This project has important implications for the literature on managerial careers and studies of external labor markets by providing new contingency factors for understanding the effect of specialization on career outcomes. The third chapter is devoted to the macro patterns of managerial mobility and their connection to organizational design. I use a large sample of matched employee-employer data collected by the French National Statistical Institute to look at how managers with different career profiles are matched to organizations with different structures and moved to different parts of these organizations.Keywords : managerial careers, functional diversity, specialists and generalists, hiring, promotion, employee mobility, talent management

This thesis studies dynamic information design and network theory. The thesis is composed of four chapters. In the first chapter, I study informa tion design in a dynamic moral hazard environment. An agent and an expert face a common uncertainty regarding the effectiveness of a collective decision. The agent bears the cost of effort of information ac quisition and makes the final decision. The expert is the only observer of research outcomes and provides information over time to the agent. Both parties are equally affected by the decision. I show that one opti mal information policy consists in disclosing truthfully with delay. In the first periods of time, the delay is zero, then strictly increases and finally vanishes. By the time the delay decreases back to zero, the agent has taken the decision with probability one. In the second chapter, we study a dynamic principal-agent problem, where the sole instrument the principal has to incentivize the agent is the disclosure of informa tion. The principal aims at maximizing the (discoun ted) number of times the agent chooses the principal’s preferred action. We show that there exists an optimal contract, where the principal stops disclosing informa tion as soon as its most preferred action is a static best reply for the agent, or else continues disclosing information until the agent perfectly learns the princi pal’s private information. If the agent perfectly learns the state, he learns it in finite time with probability one ; the more patient the agent, the later he learns it. In the third chapter, two types of intervention are commonly implemented in networks : characteristic intervention which influences individuals’ intrinsic incentives, and structural intervention which targets at the social links among individuals. In this paper we provide a general framework to evaluate the distinct equilibrium effects of both types of interventions. We identify a hidden equivalence between a structural intervention and an endogenously determined characteristic intervention. Compared with existing approaches in the literature, the perspective from such an equivalence provides several advantages in the analysis of targeting inter ventions of the network structure. We present a wide range of applications of our theory, including deter mining whether a structural intervention is beneficial, identifying the most wanted criminal(s) in delinquent networks, and targeting the key bridge nodes for dis connected communities. In the last chapter, we study the problem of designing efficient network sequen tially. In each period, the planner connects two unlin ked agents in the network formed in previous period, then the agents play a game with local complemen tarity under the newly formed network. The planner benefits from the entire discounted stream of equili brium welfare. We show that, forming a nested split graph in each period is an optimal strategy for the planner for any specific values of discount factors. More over, when the planner heavily discounts future wel fare, the optimal strategy induces a quasi-complete graph in each period regardless of the strength of complementary effect. Our paper therefore provides a micro-foundation for quasi-complete network since it is formed under greedy algorithm. We also discuss the robustness of these results under non-linear best response and heterogeneous agents.

This three-chapter thesis investigates the interplay between government intervention and corporate financial and real behavior. The first chapter investigates how the financing of government expenditures affects corporate outcomes. I show that local governments’ increased reliance on debt to finance their expenditures adversely affects the private sector via a crowding out effect. In large developed and developing countries, local government debt mostly consists of bank loans. Using French administrative data over 2006-2018, I uncover a crowding out effect of these loans on corporate credit, investment, employment, and output. Combining causal reduced-form evidence and a model, I show that crowding out reduces the output multiplier of debt-financed local government spending by 0.3. These results show that constraints on financing supply reduce the stimulus effect of debt-financed government spending. The second chapter focuses on government intervention in the corporate sector. This chapter is in collaboration with Aymeric Bellon (Wharton) and Louis-Marie Harpedanne (Banque de France). We investigate the French credit mediation program, a policy aimed at helping firms solve their disputes with their lenders. In a mediation, an expert suggests a non-legally binding solution after communicating with all parties. Can a policy that only facilitates negotiation have any real effect? Exploiting administrative data and plausibly exogenous variation in eligibility to public mediators across counties for identification, we find that participating in a mediation reduces firms’ liquidation probability by 34.6 percentage points, and leads to higher credit, employment, and investment at the three-year horizon. All the effects are driven by firms that borrow from more than one bank. These results support the view that mediations solve coordination problems between lenders. In the last chapter, I study how the political economy distortions inherent to governments affect firms. This chapter is in collaboration with Anne-Laure Delatte (Université Paris Dauphine) and Adrien Matray (Princeton). We document a reciprocal favors scheme between local politicians and banks in France. We find that formally independent, profit-maximizing banks increase their supply of credit to the corporate sector for the constituencies of contested political incumbents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. These results show that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector's effective independence from politically motivated distortions.

This dissertation investigates the consequences of the complex relationships between firms and various non-market stakeholders. The first essay examines if corporate political activity (CPA) helps sustain competitive benefits. Prior literature does not address this question, only whether CPA increases profits – with mixed results over short timescales. We theorize about how political capital affects the regression-to-the-mean of profits through firm and industry persistence mechanisms. Using data on over 6,000 firms from 14 democratic countries, we estimate time-varying, firm-specific performance persistence coefficients with random-coefficient models - and profit volatility measures. Triangulation over various identification methods suggests that the half-life of political capital is shorter than expected, and also compared with other strategy interventions. Political connections are marginally effective at sustaining performance and reducing volatility, delaying profit convergence by only 0.180 years – and with no effect beyond seven years. These modest CPA benefits are further curbed by legislative constraints and political stability. The second essay highlights the tradeoffs involved in the firms’ relationship with two non-market stakeholders: politicians and social activists. This study argues that the presence of board political connections increases the susceptibility of the firm to activist actions – owing to, i. the conflicting objectives of these two non-market actors, and ii. the perceived higher sensitivity of connected firms to societal expectations. Furthermore, using a simple analytical model, I demonstrate that this effect is strongly contingent on the firms’ level of ESG (employee, social and governance policies) adoption – such that, at higher levels of ESG adoption, the liability of connectedness dissipates (or diminishes considerably). Both propositions find adequate support in the empirical analysis.Theoretically, by revealing a firm-specific determinant of activist actions, this study takes us a step closer towards defining the ‘corporate opportunity structure’ for activism, while also better characterizing the complex trade-offs involved in the firms’ relationship with various stakeholders. Finally, the third essay examines firms’ motivations for adopting CSR (corporate social responsibility) practices. I adopt the ‘risk-insurance’ view of firms’ CSR engagement to argue that when faced with an abrupt change in the institutional landscape leading to considerable muting of the rules and regulations pertaining to sustainability, firms would be keen to proactively improve corporate social performance (CSP) in order to neutralize the liability associated with being embedded in a low CSRemphasis regime. The study uses Trump’s win in the 2016 US Presidential election as an exogenous event that resulted in a marked reduction in the US govt’s emphasis on sustainability related policies. Diff-in-diff analysis on a matched sample of US and non-US firms suggest that, on average, US firms improved their sustainability footprint after Trump’s election. Considerable heterogeneity was observed based on firms’ ideological proclivities: non-partisan firms reported a significantly lower magnitude of improvement compared to their partisan counterparts.Keywords : Corporate politics, Social activism, Corporate social performance

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