David A. Matsa
David A. Matsa

Associate Professor of Finance

Print Overview

David Matsa is an Associate Professor of Finance at the Kellogg School of Management at Northwestern University, where he teaches corporate finance in the MBA program, and a Research Associate at the National Bureau of Economics Research. Professor Matsa’s research focuses on connections between business and financial strategy and emphasizes the importance of labor market frictions in the corporate environment. His recent research examines optimal corporate capital structure determination, concentrating on various strategic motivations vis-à-vis the firm’s workforce, and on the role of managerial preferences in firms’ labor market and other strategies, including workforce hiring and downsizing decisions.

Professor Matsa received his Ph.D. in Economics from the Massachusetts Institute of Technology. Prior to graduate study, he worked as a consultant at McKinsey & Company.

Areas of Expertise
Corporate Bankruptcy
Corporate Capital Structure
Corporate Finance
Corporate Restructuring
Mergers and Acquisitions
Payout Policy (Dividends, Repurchases)

Print Vita
PhD, 2006, Economics, Massachusetts Institute of Technology
BS, 2000, Mathematics, Massachusetts Institute of Technology
BS, 2000, Economics, Massachusetts Institute of Technology

Academic Positions
Associate Professor of Finance, Kellogg School of Management, Northwestern University, 2013-present
Research Associate, National Bureau of Economic Research, 2014-present
Affiliate, Center for Applied Microeconomics, 2015-present
Affiliate, Center for the Study of Industrial Organization, 2008-present
Assistant Professor of Finance, Kellogg School of Management, Northwestern University, 2006-2013

Honors and Awards
IRRC Institute Investor Research Award, 2014
Certificate of Impact Teaching Award, Kellogg School of Management, Contemporary Issues in Finance, 2014
Certificate of Impact Teaching Award, Kellogg School of Management, Corporate Finance, 2014
Marshall Blume Prize in Financial Research, Honorable Mention, The Wharton School, University of Pennsylvania, 2012
Marshall Blume Prize in Financial Research, Honorable Mention, The Wharton School, University of Pennsylvania, 2011
NYU Glucksman Award for the Best Paper in Finance, 2010-2011
CRA International Award for the Best Corporate Finance Paper at the Western Finance Association Meeting, 2009

Print Research
Research Interests
Corporate Finance, Labor Economics, Industrial Organization, Regulation

and . Forthcoming. Playing it Safe? Managerial Preferences, Risk, and Agency Conflicts. Journal of Financial Economics.
, ,  and . 2016. Why Do Firms Use High Discount Rates?. Journal of Financial Economics. 120(3): 445–463.
and . 2016. Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms. Journal of Finance. 701(2): 507-550.
and . 2014. Workforce Reductions at Women-Owned Businesses in the United States. Industrial and Labor Relations Review. 67(2): 422-452.
and . 2014. Common Errors: How to (and Not to) Control for Unobserved Heterogeneity. Review of Financial Studies. 27(3): 617-661.
,  and . 2013. CEO Compensation and Corporate Risk-Taking: Evidence from a Natural Experiment. Journal of Accounting and Economics. 56(2-3): 79-101.
and . 2013. A Female Style in Corporate Leadership? Evidence from Quotas. American Economic Journal: Applied Economics. 5(3): 136-169.
and . 2013. Labor Unemployment Risk and Corporate Financing Decisions. Journal of Financial Economics. 108(2): 449-470.
. 2011. Competition and Product Quality in the Supermarket Industry. Quarterly Journal of Economics. 126(3): 1539-1591.
and . 2011. Growing Out of Trouble? Corporate Responses to Liability Risk. Review of Financial Studies. 24(8): 2781-2821.
and . 2011. Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership. American Economic Review. 101(3): 635-639.
. 2011. Running on Empty? Financial Leverage and Product Quality in the Supermarket Industry. American Economic Journal: Microeconomics. 3(1): 137-173.
and . 2011. Are Restaurants Really Supersizing America?. American Economic Journal: Applied Economics. 3(1): 152-188.
. 2010. Capital Structure as a Strategic Variable: Evidence from Collective Bargaining. Journal of Finance. 65(3): 1197-1232.
. 2007. Does Malpractice Liability Keep the Doctor Away? Evidence from Tort Reform Damage Caps. Journal of Legal Studies. 36(2): S143-S182.
Working Papers
,  and . 2014. Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit.
Book Chapters
,  and . 2001. "Pricing Dynamics of Multi-Product Retailers." In Advances in Applied Microeconomics, edited by M.R. Baye and J.P. Nelson, vol. 10, 129-153. London, UK: Elsevier.
and . "Restaurants, Regulation, and the Supersizing of America." Regulation, Fall 2010.

Print Teaching
Teaching Interests
Corporate finance
Full-Time / Part-Time MBA
Finance II (FINC-431-0)

**This version of Finance II is designed for students who took Finance I during or after Fall 2014. This course will be offered in Fall 2014 in Evanston & Chicago and offered in Winter 2015 in Chicago.**

Finance II: Corporate Finance covers the financial knowledge you need to run a firm, whether the firm is a multi-billion international conglomerate or a three-person start up. You will learn how to answer the three fundamental question of corporate finance: (1) Capital structure or the funding decision: which source(s) of capital should you use to fund the firm's project? (2) Capital budgeting or the investment decision: which projects should you invest in? (3) Dividend decision: how should you deploy the capital that the project returns?

We will cover the three fundamental methods for valuing projects and firms: discounted cash flow (or net present value), real options, and multiples analysis. The class begins with a theoretical framework. The world of finance is very complex. Without a logical structure that you can use to frame and answer questions, you will rapidly become lost and will be unable to defend your position. The theoretical framework is valuable, however, only if you can use it to examine real world decisions. Thus the majority of class time will be devoted to applying the logical framework.

This course is important for anyone who plans to run a firm or a division, who hopes to be involved in the investment or funding decisions of the firm, who plans to work for a service provider who will assist the firm in analyzing these decisions (e.g., banking and consulting), or who plans to invest in firms or advise clients who will invest in firms. Even if you initially specialize in a different functional area, you want to understand how the finance function works. The most brilliant idea isn't useful if you cannot get it funded.

Recommended Prerequisites: ACCT-430 and MECN-430

Thought Leadership Seminar (FINC-484-5)
This course was formerly known as FINC 484-A TLS: Contemporary Issues in Finance
There are several variations of this course:

European Banking and the Financial Crisis (FINC-484-5)

Objective: This thought leadership seminar is designed to facilitate an in depth exploration of current issues in European banking in the aftermath of the global financial crisis of 2007 - 2009. In Europe banks are more important as a source of finance for the real economy than in the US; therefore understanding the issues facing the banks is key to understanding the future of the European economy. Starting with a short introduction to financial systems and banking, covering the financial crisis, the Euro crisis, and the newly established European Banking Union each session will focus on a distinct topic to allow for a comprehensive, yet focused and digestible discussion of the subject matter from both a micro and a macro perspective.

Format: This seminar consists of lectures, class discussions and group assignments. Source materials will include a combination of first-hand case studies, relevant chapters from the leading text books in the field, most recent academic and industry research, publications from relevant institutions and pertinent news articles from the business press. Students will also be asked – in groups and on the basis of their choice of newspaper article – to lead a discussion on current events in European banking, write a corresponding short opinion / editorial piece and write and present a focused paper in one of the sessions´ topic areas.

Requirements: Prior exposure to the banking sector and / or to Europe is helpful but by no means a requirement. A high level of preparedness and participation, however, is essential to ensure that the seminar is a rewarding experience for all participants.

Contemporary Issues in Business and Society (FINC-484-5)

This seminar will use a roundtable discussion format to facilitate an in-depth exploration of current issues in corporate governance and finance, and how they affect and are influenced by society. Our sessions will focus on a combination of predetermined topics and ones chosen by students from the current events of the week. We will begin by debating a central question in corporate governance: should creating value for shareholders be the firm’s first priority? The seminar will also discuss major issues such as corporate decisions to lay off employees, public policies aimed at achieving gender parity in corporate boardrooms, the growth of executive compensation, and the rise in the top one percent (all topics are subject to change). Source materials will include a combination of business cases, recent academic research, and news articles from the popular press.