Elisabeth Kempf joined Chicago Booth in 2016 as an Assistant Professor of Finance. Her research interests lie at the intersection of corporate finance, financial intermediation, and labor economics. Currently she is studying the incentives of credit rating analysts and learning effects among mutual fund managers. Her dissertation has been awarded the AQR Top Finance Graduate Award 2016, the WFA Cubist Systematic Strategies Ph.D. Candidate Award for Outstanding Research, the Young Scholars Finance Consortium Best Ph.D. Paper Award, and the 2015 EFA Best Doctoral Tutorial Paper Prize.
Kempf holds a Ph.D. in finance from Tilburg University (Netherlands), an M.Sc. in finance from HEC Paris (France), and a B.Sc. in business administration from the University of Mannheim (Germany). Prior to her Ph.D. studies, she worked as an analyst at Deutsche Bank.
2017 - 2018 Course Schedule
New: Taxing Successful Innovation: The Hidden Cost of Meritless Class Action Lawsuits
Meritless securities class action lawsuits disproportionally target firms with successful innovations. We establish this fact using data on securities class action lawsuits against U.S. corporations between 1996 and 2011 and the private economic value of a firm's newly granted patents as a measure of innovative success. Our findings suggest that the U.S. securities class action system imposes a substantial implicit "tax" on highly innovative firms, thereby reducing incentives to innovate ex ante. Changes in investment opportunities and corporate disclosure induced by the innovation appear to make successful innovators attractive litigation targets.
REVISION: The Job Rating Game: The Effects of Revolving Doors on Analyst Incentives
Investment banks frequently hire analysts from rating agencies. While many argue this "revolving door" undermines analysts' incentives to issue accurate ratings, this paper suggests it more likely improves accuracy at the rating agencies. Using an original dataset that links employee performance and career paths, I find that credit analysts who issue more accurate ratings are more likely to be hired by investment banks. Optimism does not significantly improve analysts' prospects to be hired, except by investment banks whose issues they have recently rated. Overall, investment banks appear to reward analysts mainly for accuracy rather than favors.
REVISION: Learning by Doing: The Value of Experience and the Origins of Skill for Mutual Fund Managers
Learning by doing matters for professional investors. We develop a new methodology to show that mutual fund managers outperform in industries where they have obtained experience on the job. The key to our identification strategy is that we look "inside' funds and exploit heterogeneity in experience for the same manager at a given point in time across industries. As fund managers become more experienced, they pick better stocks, and their trades become better predictors for abnormal stock returns around subsequent earnings announcements. Our approach identifies experience as a first-order driver of observed mutual fund manager skill.
REVISION: Distracted Shareholders and Corporate Actions
Investor attention matters for corporate actions. Our new identification approach constructs firm-level shareholder "distraction" measures, by exploiting exogenous shocks to unrelated parts of institutional shareholders' portfolios. Firms with "distracted" shareholders are more likely to announce diversifying, value-destroying, acquisitions. They are also more likely to grant opportunistically-timed CEO stock options, more likely to cut dividends, and less likely to fire their CEO for bad performance. Firms with distracted shareholders have abnormally low stock returns. Combined, these patterns are consistent with a model in which the unrelated shock shifts investor attention, leading to a temporary loosening of monitoring constraints.