Description: Description: Description: David Matsa

David A. Matsa
Professor of Finance

Kellogg School of Management

Northwestern University

2211 Campus Drive

Evanston, IL 60208

dmatsa @

Description: Description: Description:

Curriculum Vitae

Research [ listed chronologically ] [ listed by topic ]


Papers are organized by topic and include short thematic summaries. 

         Finance & Labor

Capital Structure

·         Capital Structure and the Firm’s Workforce, Annual Review of Financial Economics, forthcoming.

-   Survey article providing a framework for understanding the unique impact of a firm’s workforce on its capital structure.

·         Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms (with Jennifer Brown), Journal of Finance 71 (2), April 2016, p.507–550.

-   Workers’ labor supply decreases to firms in distress.

·         Labor Unemployment Risk and Corporate Financing Decisions (with Ashwini Agrawal), Journal of Financial Economics 108 (2), May 2013, p.449–470.

-   Firms optimally reduce leverage to mitigate workers’ exposure to the firms’ distress.

·         Capital Structure as a Strategic Variable: Evidence from Collective Bargaining, Journal of Finance 65 (3), June 2010, p.1197–1232.

-   Firms use leverage and the threat of financial distress strategically to improve its bargaining position with workers.

Workforce Strategy

·         A Female Style in Corporate Leadership? Evidence from Quotas (with Amalia Miller), American Economic Journal: Applied Economics 5 (3), July 2013, p.136–169.

-   Firms affected by Norway’s gender quota for corporate board seats undertook fewer workforce reductions than comparison firms.

·         Workforce Reductions at Women-Owned Businesses in the United States (with Amalia Miller), Industrial and Labor Relations Review 67 (2), April 2014, p.422–452.

-   Gender (and perhaps the preferences and values) of business owners is also related to private firms’ employment strategies in the United States.

·         Do Male Workers Prefer Male Leaders? An Analysis of Principals’ Effects on Teacher Retention (with Aliza Husain and Amalia Miller), November 2018

-   Male teachers are about 12% more likely to leave their schools when they work under female principals than under male principals.

·         Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership (with Amalia Miller), American Economic Review P&P 101 (2), May 2011, p. 635–639.

-   We use gender to explore the role of directors’ preferences, perceptions, and networks in the selection of corporate executives.

Corporate Investment

·         Playing it Safe? Managerial Preferences, Risk, and Agency Conflicts (with Todd Gormley), Journal of Financial Economics 122 (3), December 2016, p.431–455.

-   When not monitored, managers often "play it safe" by taking value-destroying actions that reduce their firms’ risk of distress.

·         Growing Out of Trouble? Legal Liability and Corporate Responses to Adversity (with Todd Gormley), Review of Financial Studies 24 (8), August 2011, p.2781–2821.

-   Financial leverage amplifies risk-related managerial agency conflicts.

·         CEO Compensation and Corporate Risk-Taking: Evidence from a Natural Experiment (with Todd Gormley and Todd Milbourn), Journal of Accounting & Economics 56 (2–3), November/December 2013, p.79–101.

-   Option-based pay encourages risk taking.

·         Why Do Firms Use High Discount Rates? (with Ravi Jagannathan, Iwan Meier, and Vefa Tarhan), Journal of Financial Economics 120 (3), June 2016, p.445–463.

-   Operational constraints, such as limited managerial bandwidth or organizational manpower, lead the average publicly traded firm to use a 2.4 percentage point higher discount rate when screening investment opportunities.

Housing Finance

·         Unemployment Insurance as a Housing Market Stabilizer (with Joanne Hsu and Brian Melzer), American Economic Review, 108 (1), January 2018, p.49–81.

-   UI expansions during the Great Recession prevented about 1.3 million foreclosures, showing that policies that make mortgages more affordable can reduce foreclosures even when borrowers are severely underwater.

·         Locked in by Leverage: Job Search during the Housing Crisis (with Jennifer Brown), December 2016.

-   Mortgage distress distorts job search by impeding household mobility. Distressed homeowners apply for fewer jobs that require relocation and broaden their search to lower level positions nearby.

         Finance & Industrial Organization

·         Competition and Product Quality in the Supermarket Industry, Quarterly Journal of Economics 126 (3), August 2011, p.1539–1591.

-   The risk of customers switching stores provides competitors with a strong incentive to invest in product quality.

·         Running on Empty? Financial Leverage and Product Quality in the Supermarket Industry, American Economic Journal: Microeconomics 3 (1), February 2011, p.137–173.

-   Financial leverage can undermine firms’ incentive to provide quality products.

·         Common Errors: How to (and Not to) Control for Unobserved Heterogeneity (with Todd Gormley), Review of Financial Studies 27 (3), February 2014, p.617–661.

-   Approaches commonly used in finance research to control for unobserved group-level heterogeneity, such as firms’ industry, are flawed. We describe the limitations of these approaches and alternative estimators that are consistent.

-   Programming advice [link]

-   Lecture slides for Ph.D. course [link]

·         Pricing Dynamics of Multi-Product Retailers (with Daniel Hosken and David Reiffen), in Advances in Applied Microeconomics, Volume 10: Advertising and Differentiated Products, edited by M.R. Baye and J.P. Nelson (New York: Elsevier), 2001, p.129–153.

-   We describe empirical regularities in grocery store pricing strategies, including that products are more likely to go on sale in periods of peak demand.

         Public Policy

·         Who Votes for Medicaid Expansion? Lessons from Maine’s 2017 Referendum (with Amalia Miller), January 2018

-   We analyze local voting results to identify characteristics of areas that support Medicaid expansion.

·         Are Restaurants Really Supersizing America? (with Michael Anderson), American Economic Journal: Applied Economics 3 (1), January 2011, p.152–188.

-   A natural experiment finds no causal link between restaurant consumption and obesity, likely because consumers offset calories from restaurant meals by eating less at other times.

·         Does Malpractice Liability Keep the Doctor Away? Evidence from Tort Reform Damage Caps, Journal of Legal Studies 36 (2), June 2007, p.S143–S182.

-   Damage caps on medical malpractice damages have little effect on physician supply aside from specialist physicians in extremely rural areas, who face high uninsured litigation costs and a more elastic demand.