About
- Sylvan C. Coleman Professor of Financial Management
- Financial Research Advisor at the Federal Reserve Bank of New York (2021-2023)
- Principal Economist at the Board of Governors of the Federal Reserve System (2017-2018)
Voting History
Question A: Establishing a sovereign wealth fund to invest in domestic infrastructure, emerging technologies, and/or strategic sectors would bring substantial benefits to the US economy over a ten-year horizon.
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Question B: For the US, establishing a sovereign wealth fund would be substantially better for citizens relative to reducing public debt burdens.
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Question A: A bitcoin's value derives from the belief that others will want to use it, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.
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Question B: A substantial source of the value of unbacked decentralized private cryptocurrencies, such as Bitcoin, arises from their convenience for use in illegal activities.
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Question C: A properly diversified portfolio should include crypto assets.
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Question A: The trend of consolidation in the US banking sector will lead to fewer, but more profitable, mega-banks with over $250 billion in assets dominating the market.
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Question B: The current liquidity and capital regulations are inadequate to address run risks of banks in a digital era.
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It is appropriate advice for retail investors to tilt their portfolio away from the market portfolio towards factors that have been identified in the academic literature to earn positive abnormal returns relative to the Capital Asset Pricing Model.
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Question A:Stock markets around the world have seen an increasing concentration of trades in or near the closing auction. In the US, for example, about a third of all S&P 500 stock trades are now executed in the final ten minutes of the session, up from 27% in 2021.
The increased concentration of trading in the final minutes of the trading day has a measurably detrimental effect on market quality.
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Question B: Strict indexing implemented with trading at the close to avoid tracking error creates a measurable performance drag that could be avoided with more flexible passive strategies.
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Question A: Public companies that pursue social and environmental initiatives bear no measurable costs (in terms of lower profits) relative to similar companies that do not pursue such initiatives.
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Question B: Public companies that pursue social and environmental initiatives benefit from a measurably lower cost of capital than similar companies that do not pursue such initiatives.
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Question C: There are substantial social benefits when managers of public companies make choices that account for the impact of their decisions on customers, employees, and community members beyond the effects on shareholders.
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Question A: The lower willingness of private firms to go public, combined with the increased number of publicly traded firms being taken private over the last 25 years, is measurably net negative for economic growth.
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Question B: All else equal, reducing regulatory barriers (including reporting requirements such as Sarbanes Oxley 404) to public listing would substantially increase the share of publicly traded firms in the economy.
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Question C: The lack of transparency about unlisted private firms' financial performance substantially hinders the efficiency of the allocation of capital.
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Question A: Letting publicly traded firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.
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Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders.
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Question A: It seems likely that Japanese authorities intervened in the foreign exchange market recently to prop up the yen – see, for example: https://www.ft.com/content/455784ec-0465-46ee-8c73-fc5ce3e31c37. In such circumstances, intervention refers to purchases or sales of domestic or foreign currency without changing the monetary policy stance.
Large-scale intervention by public authorities in currency markets can move exchange rates substantially.
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Question B: The effectiveness of foreign exchange interventions can last beyond one month.
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Comment: If the country has abundant amount of FX reserves, effectiveness of FX interventions can last for a while.
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Retail investors account for a large share of global wealth, but a small share in private equity holdings. (see link: https://bain.com/insights/why-private-equity-is-targeting-individual-investors-global-private-equity-report-2023/)
A reduction in the barriers to all retail investors investing in private equity funds - notably regulatory restrictions on investor wealth/income and on liquidity - would substantially improve household welfare.
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Regulator Probes BlackRock and Vanguard Over Huge Stakes in U.S. Banks – The WSJ reports that ‘The FDIC is scrutinizing whether the index-fund giants are sticking to passive roles when it comes to their investments in U.S. banks.’
The exemption of passive asset managers from banking rules - such as needing permission when they acquire shares above the 10% threshold - generates measurable risks to the accomplishment of the FDIC's mission.
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Question A: Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.
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Question B: When short sellers start to establish substantial short positions in a stock, the stock is likely to have been overvalued.
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Question C: Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would improve the informativeness of stock prices.
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With some measures of concentration by market capitalization within broad US stock market indices at an all-time high, investors seeking a well-diversified passive equity portfolio should consider alternatives to market-cap-weighted indices.
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Comment: relative performance of stock returns across countries is notoriously difficult to forecast, e.g., Japanese equities continued to outperform for two decades in 70s-80s.
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Tesla shareholders are likely to benefit substantially from the decision by the Delaware Court of Chancery to void Elon Musk's $56 billion remuneration package.
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Comment: Tesla stock down 2% in the after hour trading following the news, which suggests that a cut in executive pay is not necessarily good news for equity holders.
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