Research

Working Papers

• Metric Visibility and Uneven Social Performance: Evidence from Foreign Institutional Ownership

Foreign institutional investors face information frictions that limit their ability to monitor geographically distant firms. However, whether and how these frictions shape firms’ responses to metric-based monitoring is not well understood. I examine whether foreign institutional ownership induces firms to reallocate resources across social performance dimensions that differ in observability and standardization. Using a global panel of 12,351 firms and novel, disaggregated ESG data, I find that foreign ownership widens the gap between firms’ performance on highly visible social metrics, such as workforce diversity, and more opaque dimensions, including worker safety and supply-chain ethics. To address endogeneity, I exploit plausibly exogenous variation from MSCI index reconstitutions and a capital-proximity instrument. The visibility-driven reallocation is stronger when investors face tighter monitoring constraints, such as shorter investment horizons and greater distraction, and is attenuated by stronger legal institutions and higher ownership concentration. Collectively, these findings show how incomplete performance measurement distorts monitoring incentives and generates unintended real effects.

• Socially Responsible Investing and Multinationals' Environmental Harm: Evidence From Global Remote Sensing Data

(With Virginia Gianinazzi, Victoire Girard and Melissa Prado)

This paper studies how Socially Responsible Investment capital shapes the environmental footprint of multinational firms. We exploit the inverse relationship between local pollution and high-frequency satellite measures of vegetation health captured by the normalized difference vegetation index (NDVI). Merging NDVI with SRI ownership for 52,806 facilities of 911 multinationals in 124 countries from 2006 to 2020 allows us to trace changes in SRI exposure within and across facilities. Higher SRI ownership is associated with improved nearby vegetation, and using mergers as a plausibly exogenous source of variation in SRI ownership corroborates these findings. Analysis of global production networks reveals a marked asymmetry: improvements near facilities in OECD countries coincide with deterioration near the same firms’ non-OECD sites, consistent with pollution offshoring. This asymmetry strengthens with more active investor oversight, indicating that engagement alone cannot counter weak domestic regulation or limited global monitoring.

• Procuring Sustainability: The Impact of Green Government Contracts [New version coming soon]
  
  This paper examines the impact of integrating sustainability criteria in federal procurement on firm behavior and environmental performance. Using comprehensive U.S. government contract and firm-level emissions data, I find that firms awarded green contracts significantly reduce their GHG emission intensity, though these reductions are not consistently greater than those from standard contracts. Despite the higher costs of green contracts, the evidence suggests that their environmental benefits may not always justify the cost premium. The effect on emissions is more pronounced for firms that are brown and financially constrained. I address endogeneity and selection biases by applying a matching technique, a Bartik instrument and exploiting an exogenous increase in public spending following census revisions. Green procurement also fosters innovation, particularly in green technologies, and generates positive but largely unilateral spillover effects in supply chains. Overall, these findings indicate that while government procurement can promote sustainability, the environmental benefits of green contracts may not justify their higher costs.
  
  

• Extreme Events and ESG Commitment: Evidence from Mutual Funds

I study how personal experiences shape mutual fund managers’ ESG commitment. Using a difference-in-differences design, I show that managers located near extreme disaster areas increase the ESG score of their portfolios in the following quarters, with stronger effects for environmental scores. The adjustment comes mainly from divestment of low-ESG stocks rather than acquisition of new high-ESG assets. Social connectedness to affected counties, prior beliefs about climate change, and periods of high media attention amplify the effect. Returns, flows and volatility remain unchanged, ruling out performance or risk aversion explanations. The findings support the salience hypothesis and show that personal experience is an independent channel through which ESG integration occurs.