The Tale of Silent Dogs: Do Stock Prices Fully Reflect the Implication of News Withholding?, with Frank Zhou (Accounting)
Abstract: We investigate whether investors correctly interpret the implication of lack of management forecasts. We find that, for firm quarters without management forecasts, investors underestimate the magnitude of bad news implied by nonguidance, which generates 40 basis points predictable negative abnormal stock returns around the earnings announcement and up to 100 basis points for some subsamples. The results are consistent with limited strategic thinking: investors underestimate the relation between management's information withholding and management's private information. This leads to an initial overpricing of the implication of nonguidance and a subsequent correction around the earnings announcement. We contribute to the literature by showing that investors are constrained in understanding managers' strategic nondisclosure decisions. As a result, management can withhold bad news without suffering much negative capital market consequence, at least prior to the earnings announcement.
The Black-White Gap in Non-Cognitive Skills Among Elementary School Children, with Todd Elder (Economics)
Abstract: A vast literature has examined black-white gaps in cognitive skills, but racial differences in non-cognitive skills have attracted relatively little attention. Using data from two cohorts of the Early Childhood Longitudinal Study, we find evidence of large black-white gaps in teacher-reported measures of non-cognitive skills, even after controlling for detailed student and family characteristics. We show that survey-based measures of non-cognitive skills understate racial gaps because of systematic differences across schools in what teacher reports actually measure. Correcting for these biases nearly doubles the size of the estimated gaps, to roughly the same magnitude as the well-documented gaps in test scores. Both the corrected and uncorrected non-cognitive skill gaps are remarkably stable across cohorts, suggesting that black children have neither made nor lost ground in recent decades.
Abstract: In this paper, I revisit the effects of unilateral divorce laws on female labor supply. I use a variety of models to check the robustness of the results and find that the estimated effects on female labor supply are remarkably robust. The estimates I mainly use in this paper suggest that unilateral divorce laws increase female labor force participation rates by roughly 4-5 percentage points, and that these effects strengthen over time. There are also strong long-term effects on the weeks and hours of work and on participation in full-time work. In addition, this paper compares the dynamic participation responses of married mothers versus married nonmothers, high education versus low education women, young versus old women and white versus black women.