Lorien Stice-Lawrence

I use downloads of regulatory filings by Securities and Exchange Commission (SEC) employees as a measure of SEC attention and find that SEC employees are disproportionately less likely to review the filings of firms with names later in the alphabet. Additional tests show that alphabetical order determines a firm’s priority when the SEC follows up on common shocks among peer firms, and that the strength of the SEC’s alphabetical bias does not vary with the intensity of resource constraints. Further, the SEC appears to be more surprised by the restatements of end-of-the-alphabet firms. These results are consistent with a cognitive bias that leads SEC employees to pay more attention to firms at the top of alphabetically sorted lists. Last, using shocks to alphabetical order caused by firm name changes, I find that alphabetically induced increases in SEC attention are linked with lower future noncompliance, suggesting that the regulatory effects of alphabetical order are material. Overall, this study highlights the “human” element of regulatory attention.

We develop an empirical proxy for companies’ differential communication to local and foreign investors using translation differences in public disclosure. We use a field experiment to validate that our proxy is associated with differences in the information firms provide in response to private inquiries from local and foreign investors, and document that differential communication is associated with increases in information asymmetry. It is also linked to decreases in the relative information quality of foreign analysts, even in cases when foreign demand for information is high and communication costs are low. These and a variety of supporting tests lead us to conclude that firms use differential communication intentionally because of in-group favoritism, and when catering to different investor groups in order to maximize stock price. This study highlights the role of differential communication as one driver of local information advantage.

We explore an important but understudied governance mechanism: thethreat of public campaigns. Unlike overt activism or the threat of exit, thisstrategy allows investors to influence firms without launching costly andconfrontational public battles. We focus on investors who hold large ownershipstakes (blockholders) and have a disproportionate ability to influence firms,introducing a new method to identify PotentiallyActivist Stakes based on blockholders’ history of activism. We validatethis classification by showing that Potentially Activist Stakes aremore likely to evolve into overt activism and involve more direct interactionswith management. Targeted firms exhibit outcomes—such as stock returns,executive turnover, and M&A activity—that fall between those ofnon-activist and overtly activist investments. However, these are not merelyprivate campaigns that mirror the adversarial nature of their publiccounterparts. Potentially Activist Stakes are more likely to vote with managementin proxy voting—behavior inconsistent with even mild forms of overt activism—reflectinga strategic, cooperative approach that leverages the credible threat of publicaction without necessarily invoking it.

We estimate the prevalenceand drivers of short squeezes after short-selling attacks. Positive returns after attacks have a disproportionate tendency to fully reverseand are accompanied by heightened short covering, consistent with the presenceof short squeezes. We assess and find no support for non-squeeze drivers of thesepositive return reversals and show they are more likely to be accompanied by squeeze-relatednews articles, increased stock volatility, and disruptions in the stock lendingmarket. Using positive return reversals as a proxy for short squeezes, weestimate that 15% of short attacks experience squeezes, and squeeze risk increaseswith short sellers’ visibility but decreases with the credibility of theirevidence. Additionally, squeezes appearto be precipitated by actions of firms and investors, including insiderpurchases, share recalls, retail investor trading, and firm disclosures. Our findingsquantify a material risk and check on activist short selling and are especiallytimely given recent proposed short-selling restrictions.

Health care costs in the United States make up a larger proportion of gross domestic product than in any other developed country and continue to rise. We examine whether the use of consistent costing information across hospitals (“costing information consistency”, or CIC) provides one avenue to reduce these costs. We empirically measure CIC at the hospital level by identifying how many other hospitals in the hospital group to which the hospital belongs also use the same costing system vendor. Using M&A activity among costing system vendors as an instrument for exogenous changes in hospital CIC, we find that increased cost comparability from CIC leads to economically significant decreases in hospital costs. These cost reductions appear to be achieved without compromising quality of care. We find no significant association between CIC and declines in patient satisfaction, mortality, or readmission rates. Reductions in expenses as the result of CIC are concentrated in non-clinical services such as administration, medical records, and housekeeping.