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 10, November 2018, p.387–412.

-   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 of business owners is also related to private firms’ employment strategies in the United States.

·         The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice (with Todd Gormley, Vishal Gupta, Sandra Mortal, and Lukai Yang), July 2021.

-   The Big Three asset managers led firms to add at least 2.5 times as many female directors in 2019 as they had in 2016 and to promote female directors to key board positions.

·         Do Male Workers Prefer Male Leaders? An Analysis of Principals’ Effects on Teacher Retention (with Aliza Husain and Amalia Miller), Journal of Human Resources, forthcoming.

-   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), Journal of Financial Economics 136 (3), June 2020, p.623648.

-   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

·         Inclusive Monetary Policy: How Tight Labor Markets Facilitate Broad-Based Employment Growth (with Nittai Bergman and Michael Weber), January 2022.

-   By tightening labor markets, expansionary monetary policy especially benefits workers with lower labor force attachment.

·         Who Votes for Medicaid Expansion? Lessons from Maine’s 2017 Referendum (with Amalia Miller), Journal of Health Politics, Policy and Law 44 (4), August 2019, p.563–588.

-   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.