Edward Shore

Research

Publications

Corporate Social Responsibility, with Harrison Hong. Annual Review of Financial Economics, November 2023, Vol. 15, 327-350. Link.

Is shareholder interest in corporate social responsibility driven by pecuniary motives (abnormal rates of return) or non-pecuniary ones (willingness to sacrifice returns to address various firm externalities)? To answer this question, we categorize the literature into seven tests: (1) costs of capital, (2) performance of portfolios, (3) ownership by types of institutions, (4) surveys and experiments, (5) managerial motives, (6) shareholder proposals, and (7) firm inclusion in responsibility indices. These tests and the most recent proposals data predominantly indicate that shareholders are driven by non-pecuniary motives. To stimulate further research on welfare implications for global warming, we assess whether estimates of the returns shareholders are willing to sacrifice (or, ‘greeniums'), along with the increasing amounts of assets pledged to firms that become sustainable, are consistent with the growth of aggregate investments in the decarbonization sector.

Working Papers

Living up to Analyst Expectations. (Job Market Paper) Link.

I develop a new empirical approach to reexamine the relationship between analyst forecasts and earnings manipulation. Traditional methods relying on ‘bunching' of earnings just above forecasts are limited by the endogenous nature of forecasts as a benchmark. To address this concern, I propose an instrumental variable design, leveraging brokerage mergers and the composition of analyst ‘optimism', that generates exogenous forecast variation. Findings reveal a symmetric, one-to-one response of earnings to forecast changes, even when the two are far apart. Reduced-form results align with a model framing manipulation as a systematic response to forecasts, driven by broader incentives than simply ‘beating' the forecast.

Renewable Asset Price Volatility and Its Implications for Decarbonization, with Harrison Hong and Jeffrey Kubik, NBER Working Paper, Link.

We find that the price volatility of renewable assets is significantly greater than that of brown assets. Our causal estimates leverage the response of electricity and credit markets to US state-level renewable portfolio standards that require some utilities to use renewables while exempting others. This extra risk is related to more volatile electricity prices and revenues, consistent with uncertainties including renewables intermittency. Using a growth model where the share of green capital balances climate damages and diversification benefits, we find that greater green-asset volatility is a more important determinant of economy-wide decarbonization than productivity differences of green versus brown capital.

‘Did You Catch the Game Last Night?' Peer Group Effects in Sell-Side Analyst Forecasts, with Lukas Fischer. Link.

Evidence suggests that peer groups have significant implications for economic decision-making, yet ambiguity remains on the precise mechanism of these effects. In particular, it is often unclear whether peer effects are driven by the sharing of information or the local diffusion of sentiment. In this paper, we identify a source of peer group influence that is plausibly orthogonal to information provision yet nonetheless affects economic decision-making. Using novel data on equity analyst education, merged with earnings-per-share forecasts, we identify a source of exogenous variation in analyst forecasts: the shock to an analyst of their undergraduate college football team winning the NCAA Championship Game. We first find that analysts' forecasts respond positively to the analysts' undergrad school's football team winning the NCAA final. We then find that the sentiment shock of `winning' spreads within an analyst's brokerage, positively influencing the forecasts of their colleagues. We find that brokerages where the degree of this diffusion is greater have lower female representation in their analyst teams, as well as lower ESG scores.

Work in Progress

Doing well by doing… good? The Efficacy of the Equator Principles, with Ricardo Pommer.

Teaching

Corporate Finance, Summer 2022, Columbia University

I taught a self-designed corporate finance class as a summer instructor at Columbia University. You can find my evaluation here. Below are the syllabus and notes for the class.

Syllabus

Time Value of Money
Net Present Value
Expectations

Risk and Return
Valuing Stocks
CAPM

Risk and the Cost of Capital
Corporate Financing
Agency

The Efficiency of Markets

Teaching Awards

Wueller Teaching Award, Best Master’s level TA, Runner-up 2022, Columbia University

Wueller Teaching Award, Best PhD level TA, Winner 2020, Columbia University

Wueller Teaching Award, Best Master’s level TA, Runner-up 2020, Columbia University