House Hunting in the Dark: The Impact of State-Regulated House Price Disclosures on Mortgage Access

Committee Members: Brian Miller (Chair), Vivian Fang, Eric Holzman, Joe Schroeder, and Jim Wahlen

Abstract: This study examines how disclosure of value-relevant information impacts home buyers’ access to mortgages. Utilizing variations in state-regulated house price disclosures, I examine how limited access to recent sales prices of nearby homes (comparables) impacts mortgage denial rates. In Non-Disclosure States (NDS), where comparables are not publicly available, buyers have varying information sets, leading to a wider range of negotiated prices and potentially higher mortgage denial rates. Consistent with this, I find that mortgage denials are more frequent in these states without mandated disclosures. Using Zillow’s entry with the Zestimate score, which provided NDS buyers with easily accessible value-relevant information, as a shock, I find that mortgage denial rates for NDS buyers decreased after Zillow’s entry. Also, I find that denial rates are higher in areas where buyers’ information sets likely vary more (i.e., areas with more non-local movers and smaller areas). Overall, the paper highlights the adverse effects of not mandating disclosure of value-relevant information.

Jumping Ship: Undisclosed SEC Investigations and Quiet CEO Turnover 

with Eric Holzman, Brian Miller, and Joe Schroeder

Revise & Resubmit at The Journal of Accounting and Economics

Presentations: Florida State University*, Georgia Tech*, Indiana University, Norwegian School of Economics (NHH)*, University of Alabama*, University of Florida*, University of Illinois Urbana Champaign*, University of Kentucky*, University of Nebraska*, 2024 AAA Annual Meeting (Washington D.C.), 2024 AAA FARS Midyear Meeting (Denver), 2024 April Securities and Exchange Committee Accounting and Auditing Academic Research Update*, 2024 Hawaii Accounting Research Conference, Egyptian Online Seminars in Business, Accounting, and Economics*.  (* presented by co-author)

Abstract: Prior research finds that the public revelation of misconduct leads to severe career penalties for managers, raising an interesting question about whether managers can avoid career penalties by leaving their employer before accusations become public. We exploit the private nature of SEC investigations to examine this question. We find that the likelihood of CEO quiet turnover is positively related to the presence of an undisclosed SEC investigation, but not to disclosed SEC investigations. Additionally, we find no difference in the future rehire rates between those turned over CEOs whose firms are under an investigation that is not disclosed and peers at noninvestigated firms, suggesting that there is no evidence of career penalties for managers at firms with undisclosed investigations. Last, we find that hiring a privately investigated CEO increases the subsequent employer’s likelihood of being investigated by the SEC.

Does Continuing Education Deter Misconduct? Evidence from Investment Advisers

with Anish Sharma

Presentations: University of Georgia*.  (* presented by co-author)

Abstract: Over the past decade, there has been an increased awareness of the importance of the role of human capital in accounting and finance. We contribute to this literature by examining whether continuing education requirements impact investment adviser misconduct. Although regulators use continuing education requirements to ensure professional competency, little is known about the effectiveness of these requirements. Exploiting the staggered implementation of a mandate that requires continuing education for investment advisers in certain states, we find no difference in misconduct rates for the average investment adviser. However, we find that, after CE requirements, investment advisers with prior misconduct and those with more years of experience who have continuing education requirements are less likely to commit misconduct relative to the control advisers. In addition, we find modest evidence that investment advisers with prior misconduct leave the industry after becoming subject to continuing education requirements. Our results provide nuanced evidence to regulators who are concerned with the effectiveness of continuing education requirements.