Picking Up the PACE: Loans for Residential Climate-Proofing, with Cameron LaPoint, Francesco Mazzola, Guosong Xu (non-technical summary)
Invited for dual submit review at the Journal of Financial Economics
Residential Property Assessed Clean Energy (PACE) loans allow homeowners to fund investments in green residential projects through property tax payments. We assess the housing market effects of PACE using novel loan-level data from Florida merged to property transaction, tax, and permitting records. PACE projects are capitalized into home values, but expansions of the property tax base are partially offset by an uptick in tax delinquency rates among borrowers. Lenders in PACE-enabled counties expand mortgage credit access, indicating improved recovery values despite a PACE lien's super seniority. Overall, PACE adoption increases local fiscal income while improving climate-proofing of the housing stock.
Selected Presentations (including scheduled ones): Pre-WFA Real Estate Workshop, Philly Fed Mortgage Market Research Conference, AREUEA National Conference, Utah Public Finance (UPFIN)*, Federal Housing Finance Agency, UEA Copenhagen*, 2024 LAPE-FINEST Spring Workshop*, CEPR-ESSEC-Luxembourg Conference on Sustainable Finance Intermediation*, Corporate Finance Days Conference*, Cambridge Real Estate Finance Symposium*, UBC Summer Finance Conference 2024*, FINPRO 4 Conference in Barcelona*, SFS cavalcade
Do Carbon Markets Undermine Private Climate Initiatives?, with Pat Akey, Ian Appel, and Johannes Klausmann
We study commitments to reduce emissions by firms subject to the European Union Emission Trading System (EU ETS), the world's largest cap-and-trade program. Commitments are associated with a drop in the number of carbon allowances surrendered, consistent with firms taking actions to reduce their emissions. However, firms subsequently increase their sales of allowances on the secondary market, transferring the right to pollute to others and potentially leaving aggregate emissions unchanged. Despite this, firms benefit from commitments via higher ESG scores. Our results highlight the need for researchers, practitioners, and policymakers to consider the interaction between carbon markets and private climate initiatives.
Selected Presentations (including scheduled ones): NBER Corporate Finance Fall 2024*, CUHK-RAPS-RCFS Conference*, Green Finance Research Advances*, Baruch-JFQA Climate Finance and Sustainability Conference, 2025 Bretton Woods Ski Conference*, MFA*, FIRS*
The Real Effects of Bankruptcy Forum Shopping, with Samuel Antill
Many non-Delaware firms strategically file for bankruptcy in Delaware. Should this "forum shopping" be allowed? This question has motivated six congressional bill proposals over decades of policy debate. Using a novel natural experiment and Census-Bureau microdata, we inform this debate. Comparing observably similar firms within a Delaware-adjacent state, we show that physical proximity to Delaware predicts forum shopping. Instrumenting with proximity, we find that forum shopping causally: (i) prevents closures and liquidations, (ii) shortens bankruptcies, (iii) boosts creditor recovery, and (iv) increases post-bankruptcy employment by 62%. Proximity to Delaware is uncorrelated with pre-bankruptcy employment trends, validating the exclusion restriction.
Selected Presentations (including scheduled ones): RCFS Winter Conference 2024, NBER SI 2024 Law and Economics*, Jackson Hole Finance Group Conference*, Texas Finance Festival
Pollution-Shifting vs. Downscaling: How Financial Distress Affects the Green Transition, with Yasser Boualam
We show that firms increase their pollution intensity as they become more financially distressed. This is particularly the case in high-environmental liability risk locations, akin to a risk-taking motive. We then rationalize these facts by calibrating a dynamic model featuring endogenous default, and dirty vs. clean investment. Dirty assets reduce short-term costs but expose firms to persistent liability and regulatory risks. Thus, as firms become more financially distressed, they gradually take on more risk and shift the composition of their assets toward the more polluting ones. Our counterfactuals highlight the limited environmental impact of blanket divestments when heightened financing costs lead firms to increase their pollution intensity while scaling down. Tilting strategies, however, are more effective at tapering pollution.
Selected Presentations (including scheduled ones): University of Toronto, McGill, Auburn, USC, UNC, UIUC, 2023 Minnesota Junior Finance Conference, SFS Cavalcades, Junior Finance Conference at Harvard Business School, HEC Paris “Banking in the Age of Challenges” Conference 2024, NFA, 2025 American Finance Association, Holden Conference 2024, PRI Academic Network Conference, MFA*, Innovations in Sustainable Finance, WFA
The Secular Decline in Private Firm Leverage, with Christine L. Dobridge, Erik P. Gilje, Andrew Whitten
Using firm-level administrative tax data, we document dramatic reductions in private leverage since the Global Financial Crisis, while leverage among public firms rose during this period. Changing firm characteristics are unable to account for this pattern. Younger and smaller private firms experience large declines in leverage. Reduced leverage among private firms is correlated with lower investment. The decline in private firm leverage and investment is strongly related to plausibly exogenous increases in local area bank capital requirements. Our findings suggest that banks’ credit supply plays a prominent role in explaining the leverage pattern of private firms.
Selected Presentations (including scheduled ones): MFA, 2023 University of Oregon summer finance conference, 2025 American Finance Association*, SFS cavalcade
Fresh Start or Fresh Water: The impact of Environmental Lender Liability
Revise and Resubmit at The Journal of Finance
UNPRI Conference Best PhD Paper Award (2021)
Finalist, BlackRock Applied Research Award (2021)
ETF Global® “Thought Leadership in Corporate Governance Award” (2022)
Brattle Group WFA PhD Candidate Award for Outstanding Research (2022)
Top prize in the 2nd Annual FIASI-Gabelli School Student Research Competition on ESG (2022)
E-Axes Prize, Honorable Mention (2023)
I study the impact of lenders’ environmental responsibility. My empirical setting exploits the U.S. Lender Liability Act of 1996, which reduced lenders' exposure to the environmental clean-up costs attached to some of their debtors’ collateral. I find that affected debtors increase toxic releases, commit 17.54% more environmental regulatory violations, and reduce investment in pollution reduction activities. High polluters incur lower borrowing costs and use longer debt maturity after the shock. The paper supports the view that stricter environmental liability rules lead lenders to increase borrowing costs in response to poor environmental practices conducted by their debtors.
Selected Presentations: EFA, WFA, FIRS, SFS Cavalcade, Drexel Conference on Corporate Governance, Meeting of the Society for Environmental Law and Economics (NYU), MFA doctoral symposium, PRI Academic, 2nd PhD Student Symposium at the University of Texas at Austin
Does Private Equity Ownership Make Firms Cleaner? The Role of Environmental Liability Risks
Accepted at The Review of Financial Studies
This paper shows that private equity (PE) ownership, in private-to-private buyouts, leads to a reduction in pollution when the target company faces high potential liabilities for polluting. Conversely, PE-backed firms increase pollution when environmental liability risks are low, as shown by a novel natural experiment that reduced these risks for projects located on federal land. Exploiting specific PE deals within the energy industry, I find that PE governance is the main driver of the results. The results suggest that increasing litigation and regulation-related risks can mitigate the potentially detrimental effects of PE ownership on stakeholders.
Selected Presentations: Institute for Private Capital’s AMRA Research Symposium in New York, 2022 University of Oklahoma Energy and Climate Finance Research Conference, NFA, 7th IWH-FIN-FIRE Workshop, Owners As Strategists, Northeast Workshop on Energy Policy and Environmental Economics, CICF, Drexel Corporate Governance Conference, FMCG, WEFI - Student Workshop, AFA poster session, UNC-PERC, SHoF-ECGI Conference On Sustainable Finance and Corporate Governance, 2020 PRI Academic, CAFM, Wharton-INSEAD Doctoral Consortium, EMCON, GRASFI 2020, PhD Student Symposium - UT Austin, Oxford-PERC (canceled), Wharton Risk Center Research Seminar
Personal Wealth, Self-Employment, and Business Ownership with Anthony Cookson, Erik Gilje and Rawley Heimer, Review of Financial Studies (August 2021)
We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.
Selected Presentations: NBER Entrepreneurship, HEC Paris Entrepreneurship Workshop, ITAM Finance Conference, Yale-RFS Conference on Real and Private-Value Assets, FIRS Conference (canceled), KWC Conference on Entrepreneurial Finance, MFA, WINDS
Mediating Financial Intermediation with Louis-Marie Harpedanne and Noémie Pinardon-Touati
(Work in Progress)
We study the resolution of disputes between firms and their lenders through external mediators, using novel administrative data and plausible exogenous variation in eligibility to public mediators across French counties for identification. Credit, employment and investment increase following the mediation, causing an overall reduction in firms’ liquidation of 34.6%. Additional tests support the view that mediators solve coordination problems between lenders.
Selected Presentations: 2022 SFS Cavalcade, Paris December Finance Meeting*