Lorien Stice-Lawrence

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 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.

Prior literature has used 13D and 13G filings to classify activist and non-activist investments. We argue this ignores an important governance mechanism-the threat of public campaigns-and propose a simple method to identify Potentially Activist stakes. We show that these stakes are more likely to switch to explicitly activist positions and see more in-person interactions between firms and investors than non-activist stakes. Levels of short-and long-run returns, executive turnover, and M&A activity after potentially activist investments fall between those of nonactivist and activist investments, while investors holding potentially activist stakes are more likely to vote in line with management recommendations. These results demonstrate a "middle path" where investors push for changes privately while avoiding costly public fights.

We examine textualfeedback using tens of thousands of patient comments and their correspondingnumerical ratings of medical care providers. Patient comments incrementallyexplain care providers’ current overall numerical ratings beyond granularsubcomponent ratings. Moreover, care providers appear to use the information inwritten comments to improve performance in the future; after controlling fornumerical ratings, care providers’ future performance improves when theyreceive textual feedback that is more negative, specific, or salient, althoughspecific comments appear to have a greater impact when they are not negative. Weexamine nuance in these average results by tying the content of comments todirectly related outcomes. Comments about wait times are associated with longerfuture wait times when the feedback is not negative, specific, orsalient, perhaps because care providers have already maximized performance on thisdimension. Further, care providers who receive patient comments about medical mistakesexperience a reduction in future mortality rates regardless of the manner inwhich the feedback is given, suggesting stylistic attributes of comments do notmatter when they include information that is inherently negative, salient, andspecific. Our results suggest that patient comments provide valuable feedbackto care providers, even though patients have a disadvantage in terms of medicalknowledge and expertise.