Gregor Matvos primarily studies corporate finance. His research interests are related to financial contracting, financial distress, interaction of internal organization of firms with financing and investment, corporate taxation, consumer finance, banking, corporate governance, and mergers and acquisitions.
Matvos earned a PhD in 2007 and graduated Phi Beta Kappa with honors in economics in 2002, both from Harvard University.
2015 - 2016 Course Schedule
Corporate finance; corporate governance; proxy voting; mergers; liquidity; economics of contracts, organizations.
With Joao Granja and Amit Seru, "Selling Failed Banks," Journal of Finance (forthcoming).
With Umit Gurun and Amit Seru, "Advertising Expensive Mortgages," Journal of Finance (forthcoming).
With Zhiguo He, "Debt and Creative Destruction: Why Could Subsidizing Corporate Debt be Optimal?" Management Science, Accepted.
With Amit Seru, "Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates," Review of Financial Studies, (2014), v.27(4), pp. 1143-1189.
"Renegotiation Design: Evidence from NFL roster bonuses," Journal of Law and Economics, (2014), v. 57, pp. 387-430.
"Estimating the Benefits of Contractual Completeness," Review of Financial Studies, (2013), v.26(11), pp. 2798-2844.
With Ali Hortaçsu, Chad Syverson and Sriram Venkataraman, "Indirect Costs of Financial Distress in Durable Goods Industries The Case of Auto Manufacturers," Review of Financial Studies, (2013), v.26(5), pp. 1248-1290.
With Ali Hortaçsu, Chaehee Shin, Chad Syverson and Sriram Venkataraman, "Is an Automaker’s Road to Bankruptcy Paved with Customers’ Beliefs?" American Economic Review, Papers and Proceedings, v.101(3), May 2011, pp. 93-97.
With Michael Ostrovsky, "Heterogeneity and Peer Effects in Mutual Fund Proxy Voting," Journal of Financial Economics, v.98(1), October 2010, pp. 90-112.
With Michael Ostrovsky, "Cross-Ownership, Returns and Voting in Mergers," Journal of Financial Economics, v.89(3), September 2008, pp. 391-403.
For a listing of research publications please visit
’s university library listing
REVISION: The Market for Financial Adviser Misconduct
We construct a novel database containing the universe of financial advisers in the United States from 2005 to 2015, representing approximately 10% of employment of the finance and insurance sector. Roughly 7% of advisers have misconduct records. Prior offenders are five times as likely to engage in new misconduct as the average financial adviser. Firms discipline misconduct: approximately half of financial advisers lose their job after misconduct. The labor market partially undoes firm-level discipline: of these advisers, 44% are reemployed in the financial services industry within a year. Reemployment is not costless. Following misconduct, advisers face longer unemployment spells, and move to less reputable firms, with a 10% reduction in compensation. Additionally, firms that hire these advisers also have higher rates of prior misconduct themselves. We find similar results for advisers of dissolved firms, in which all advisers are forced to find new employment independent of past ...
New: Deposit Competition and Financial Fragility: Evidence from the US Banking Sector
We develop a structural empirical model of the U.S. banking sector. Insured depositors and run-prone uninsured depositors choose between differentiated banks. Banks compete for deposits and endogenously default. The estimated demand for uninsured deposits declines with banks' financial distress, which is not the case for insured deposits. We calibrate the supply side of the model. The calibrated model possesses multiple equilibria with bank-run features, suggesting that banks can be very fragile. We use our model to analyze proposed bank regulations. For example, our results suggest that a capital requirement below 18% can lead to significant instability in the banking system.
REVISION: Selling Failed Banks
We show that the allocation of failed banks in the Great Recession was likely distorted because potential acquirers of these banks were poorly capitalized. We illustrate this phenomenon within a model of auctions with budget constraints. In our model poor capitalization of some potential acquirers drives a wedge between their willingness to pay and the ability to pay for a failed bank. Using our framework, we infer three characteristics that drive potential acquirers’ willingness to pay for a failed bank in the data: geographic proximity, bank specialization, and increased market concentration. Consistent with predictions of our model, we find that low capitalization of potential acquirers decreases their ability to acquire a failed bank. Finally, we show that the wedge between potential acquirers’ willingness and ability to pay distorts the allocation of failed banks. The costs of this misallocation are substantial, as measured by the additional resolution costs of the FDIC. These ...
REVISION: Debt and Creative Destruction: Why Could Subsidizing Corporate Debt Be Optimal?
We illustrate the welfare benefit of tax subsidies to corporate debt financing and study how the social cost/benefit trade-off of the subsidy changes with the duration of industry distress. To illustrate the benefit, we model two firms, which engage in a socially wasteful competition for survival in a declining industry. Firms differ on two dimensions: exogenous productivity and endogenously chosen amount of debt financing, resulting in a two dimensional war of attrition. Debt financing increases incentives to exit, which, while costly for the firm, is socially beneficial. These benefits decline as industry distress shortens, and the planner trades them off with increased costs of subsidizing corporate debt from the existing literature. In practice, debt payments are only subsidized for profitable firms — this implementation arises naturally in our normative model, even though the goal of the policy is to entice low productivity firms to take on debt.
REVISION: Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates
When external capital markets are stressed they may not reallocate resources between firms. We show that resource allocation within firms' internal capital markets provides an important force countervailing financial market dislocation. Using data on U.S. conglomerates we empirically verify that firms shift resources between industries in response to shocks to the financial sector. We estimate a structural model of internal capital markets to separately identify and quantify the forces driving the reallocation decision and illustrate how these forces interact with external capital market stress. The frictions in internal capital markets drive a large wedge between productivity and investment: the weaker (stronger) division obtains too much (little) capital, as though it is 12 (9) percent more (less) productive than it really is. The cost of accessing external capital funds quadruples during extreme financial market dislocations, making resource allocation within firms significantly ...
REVISION: Advertising Expensive Mortgages
We use a unique dataset that combines information on advertising and mortgages originated by subprime lenders to study whether advertising helped consumers find cheaper mortgages. Lenders who advertise more within a region sell more expensive mortgages, measured as the excess rate of a mortgage after accounting for a broad set of borrower, contract, and regional characteristics. These effects are stronger for mortgages sold to less sophisticated consumers. We exploit variation in mortgage advertising induced by the entry of Craigslist across different regions as well as a battery of other tests to demonstrate that the relation between advertising and mortgage expensiveness is not spurious. Our estimates imply that consumers pay on average $7,500 more when borrowing from a lender who advertises. Analyzing advertising content reveals that initial/introductory rates are advertised frequently in a salient fashion in contrast to reset rates, which are rarely advertised. Moreover, the ...
New: Is an Automaker's Road to Bankruptcy Paved with Customers' Beliefs?
Durable goods producers can face a pernicious feedback loop between their financial health and the demand for their products. Financial distress can reduce demand for a firm’s products if it causes consumers to worry about the firm’s ability to supply flows of goods and services — such as warranties, spare parts, and maintenance — that are typically bundled with the primary durable good. This drop in demand harms the firm’s profitability, exacerbating its financial distress, which in t
REVISION: Cross-Ownership, Returns and Voting in Mergers
We show that institutional shareholders of acquiring companies on average do not lose money around public merger announcements, because they also hold substantial stakes in the targets and make up for the losses from the former with the gains from the latter. Depending on their holdings in the target, acquirer shareholders may realize different returns from the same merger, some losing money and others gaining. Using a novel dataset we show that this conflict of interests is reflected in the mut
REVISION: Strategic Proxy Voting
Despite its importance, voting in the elections of corporate boards of directors remains relatively unexplored in the empirical literature. We construct a comprehensive dataset of 3,204,890 mutual fund votes in director elections that took place between July 2003 and June 2005. We find substantial systematic heterogeneity in fund voting patterns: some mutual funds are management friendly, and others are less so. We construct and estimate a model of voting in which mutual funds impose externaliti