Research

Working Papers

• The Social Cost of Foreign Capital

Foreign institutional investors face information frictions that limit their ability to monitor distant firms. I show that this constraint produces a ‘visibility-driven bias’: firms strategically allocate resources toward highly visible social metrics, such as workforce diversity, while neglecting less observable areas such as worker safety and supply chain ethics. Using a global panel of 12,000 firms and novel ESG data, I find that foreign investors widen this ‘visibility gap’. I use MSCI index changes and capital-proximity instruments to address endogeneity. This bias is amplified by investor distraction and short-termism but mitigated by strong host-country legal institutions. The results reveal an unintended consequence of global ESG investing: foreign capital shifts corporate focus toward what is easily measured over genuine responsibility.

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

(With Virginia Gianinazzi, Victoire Girard and Melissa Prado)

This paper investigates how socially responsible investment (SRI) reshapes multinationals’ local environmental footprints. We link satellite vegetation (NDVI) to SRI ownership for 52,806 facilities of 911 parents in 124 countries, 2006–2020. On average, higher SRI ownership is associated with improved vegetation health, consistent with reduced environmental harm. Exploiting firms’ global networks reveals a sharp asymmetry: gains around OECD facilities coincide with declines near the same firms’ non-OECD facilities, consistent with pollution displacement. This asymmetry intensifies under advanced investor engagement. Mergers in which PRI signatories acquire non-signatories provide plausibly exogenous increases in SRI ownership and corroborate these results.

• 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.