Forthcoming and accepted Papers


The Effect of Succession Taxes on Family Firm Investment: Evidence from a Natural Experiment

Journal of Finance, April 2015 issue (70:2)

Winner of the Trefftzs Award, WFA 2010

The paper provides causal evidence on the impact of succession taxes on firm investment decisions and transfer of control. I exploit a 2002 policy change in Greece that repealed the tax on intra-family transfers of businesses and show that succession taxes lead to more than a 40% decline in investment around family successions, slow total asset growth and depletion of cash reserves. Furthermore, succession taxes strongly affect the decision to sell or retain the firm within the family. These findings have broad implications since 40% of privately held firms in the US and Europe will undergo succession in the next decade.



Shareholder Democracy in Play: Career Consequences of Proxy Contests

with Vyacheslav Fos

Journal of Financial Economics 114 (2014), pp. 316-340


This paper shows that proxy contests have a significant adverse effect on careers of incumbent directors. Following a proxy contest, directors experience a significant decline in number of directorships not only in the targeted company, but also in other non-targeted companies. The results are established using the universe of all proxy contests during 1996-2010. To establish that this effect of proxy contests is causal, we use within-firm variation in directors' exposure to proxy contests and exploit the predetermined schedule of staggered boards that only allows a fraction of directors to be nominated for election every year. We find that nominated directors relative to non-nominated ones lose 45% more seats on other boards. We discuss that this pattern can be expected if proxy contest mechanism imposes a significant career cost on incumbent directors.



Is Family More Important in Bad Times ?

with Spyridon Lagaras

Abstract: The purpose of the paper is to examine the effect of founding family ownership on the cost of private debt and whether the effect is amplified by bank credit supply frictions. We examine the cost of accessing the syndicated market and we use the dispersion in lender health following the Lehman collapse as a source of exogenous variation in the availability of bank credit to firms. We find that the increase in loan spreads around the Lehman crisis was by at least 31 basis points lower for family firms. Furthermore, the gap in spreads among family and non-family firms becomes wider among firms that had pre-crisis relationships with less healthy lenders.  The evidence are consistent with family ownership lowering the cost of accessing debt financing especially when lenders are constrained. We further investigate potential channels that drive the effect of family ownership. We provide novel evidence that for 17% of the family firms  creditors impose explicit restrictions in private credit agreements that require the founding family to maintain a minimum percentage of ownership or voting power. Furthermore, credit spreads are lower when family CEOs run the firms.


Tax Evasion across Industries: Soft Credit Evidence from Greece
with Nikolaos Artavanis and Adair Morse

Winner of the Wharton School-WRDS Award for the Best Empirical Finance Paper, WFA 2013

Abstract: We begin with the new observation that banks lend to tax-evading individuals based on the bank's perception of true income. This insight leads to a novel approach to estimate tax evasion from private-sector adaptation to semiformality. We use household microdata from a large bank in Greece and replicate bank models of credit capacity, credit card limits, and mortgage payments to infer the bank’s estimate of individuals’ true income. We estimate a lower bound of 28 billion euros of unreported income for Greece. The foregone government revenues amount to 31 percent of the deficit for 2009. Primary tax-evading occupations are doctors, engineers, private tutors, accountants, financial service agents, and lawyers. Testing the industry distribution against a number of redistribution and incentive theories, our evidence suggests that industries with low paper trail and industries supported by parliamentarians have more tax evasion. We conclude by commenting on the property right of informal income.

Featured in The Wall Street Journal, The NY Times, The WashingtonPost, The Financial Times, The Economist Free Exchange and Kathimerini


Do Director Election Matter?

with Vyacheslav Fos and Kai Li

New -- Preliminary Working Paper Available. Please email me

 Work in progress

“Do Government Employees Really Shirk More on the Job than Private Sector Employees? Effort Provision in Response to Personal Shocks,” with M. Bennedsen, F. Perez-Gonzalez, and D. Wolfenzon



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