Simon Business School
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Faculty Profile

Sudarshan Jayaraman
Associate Professor of Accounting
Phone: 585.275.3491
Office: 3-160B Carol Simon Hall

Bio

My research interests are in corporate governance and the effects of accounting information in financial markets. My work on corporate governance has examined how large shareholders discipline managers via the threat of exit, and the role that stock market liquidity plays in the design of executive compensation contracts.

Teaching Interests

In addition to teaching a Ph.D. seminar, I teach Managerial Accounting in the Masters of Finance (NYC), the full-time MBA and the evening MBA programs.

Research Interests

I am currently interested in the functioning of financial institutions and the propagation of shocks between the banking and industrial sectors. In ongoing work, I examine whether bank leverage incentivizes managers to monitor their borrowers. My publications have appeared in the Journal of Accounting & Economics, Journal of Accounting Research, Journal of Finance, Review of Accounting Studies and The Accounting Review. My work has been presented not only at academic conferences within the U.S. and around the world, but also at regulatory bodies such as the European Central Bank and the Federal Reserve Bank of New York.

Professional History

Associate Professor of Accounting
University of Rochester, Simon Business School
July 2014 -
Citibank, Mumbai, India
1997 -
Olin Business School, Washington University
2007 - June 2014
HDFC Bank, Mumbai, India
1998 - 1999
KPMG, Mumbai, India
1997 - 1998

Education

UNC Chapel Hill - 2007
Ph D
Accounting
Bentley College - 2001
MBA
Finance
Institute of Chartered Accountants of India - 1997
Other
CPA (India)
University of Bombay - 1995
Other
Bachelor of Commerce
Accounting

Publications

Stock Price Informativeness and Informed Trading after S&P 500 Index Additions
Contribution Type: Journal Article, Academic Journal
2016
The Source of Information in Prices and Investment-Price Sensitivity
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN
2015
Are Banks Optimally Opaque? Theory and Evidence
Contribution Type: Journal Article, Academic Journal
2015
Cross-border Financing by the Industrial Sector Increases Competition in the Domestic Banking Sector
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Accounting Review
2015
Non-Opportunistic Bank Opacity: Theory and Evidence
Contribution Type: Journal Article, Academic Journal
2015
Product Market Peers and Relative Performance Evaluation
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN 2632153
2014
Are Reporting Incentives and Accounting Standards Substitutes or Complements in Achieving Accounting Comparability?
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN 2428263
2014
CEO equity incentives and financial misreporting: The role of auditor expertise
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Accounting Review
Volume: 90
Issue: 1
2014
The Effect of Borrower Transparency on Bank Competition, Risk-taking and Bank Fragility
Contribution Type: Journal Article, Academic Journal
2014
Who Monitors the Monitor? Bank Capital Structure and Borrower Monitoring
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Bank Capital Structure and Borrower Monitoring (December 12, 2014)
2013
Agency-based demand for conservatism: evidence from state adoption of antitakeover laws
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Review of Accounting Studies
Volume: 18
Issue: 1
2013
Does Bank Debt or Bank Equity Induce Banks to Monitor?
Contribution Type: Journal Article, Academic Journal
2013
Economic integration, IFRS adoption and accounting comparability
Journal/Publisher/Proceedings Publisher: Working paper, MIT Sloan School of Management
2013
Exit as governance: An empirical analysis
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Journal of Finance
Volume: 68
Issue: 6
2013
The Effect of Economic Integration on Accounting Comparability: Evidence from the Adoption of the Euro
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN 2286699
2012
Audited financial reporting and voluntary disclosure as complements: A test of the confirmation hypothesis
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Volume: 53
Issue: 1
2012
BANK ON IT
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Business Strategy Review
Volume: 23
Issue: 2
2012
Mark-to-market accounting and information asymmetry in banks
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Chicago Booth Research Paper
Issue: 12-35
2012
Private control benefits and earnings management: evidence from insider controlled firms
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Volume: 50
Issue: 1
2012
The effect of enforcement on timely loss recognition: Evidence from insider trading laws
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting and Economics
Volume: 53
Issue: 1
2011
The effect of mark-to-market accounting for trading securities on financial reporting transparency and information asymmetry in banks
Journal/Publisher/Proceedings Publisher: Working paper, University of Chicago
2011
The role of stock liquidity in executive compensation
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: The Accounting Review
Volume: 87
Issue: 2
2010
Financial Misreporting and Executive Compensation: The Qui Tam Statute
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN 1550348
2010
Is it really Exit versus Voice?
Contribution Type: Journal Article, Academic Journal
2010
The Effect of Airline Deregulation on the Accounting Conservatism of Airlines
Contribution Type: Journal Article, Academic Journal
2010
The Two Sides of Business Groups: Implications for Disclosure Practices
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: AFA 2011 Denver Meetings Paper
2010
Whistle blowing and CEO compensation: The qui tam statute
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: AFA 2011 Denver Meetings Paper
2009
Does equity-based CEO compensation really increase litigation risk
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Washington University N/A
2009
Information asymmetry around earnings announcements during the financial crisis
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Accounting Research Conference
2009
The complementary roles of audited financial reporting and voluntary disclosure: A test of the confirmation hypothesis
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Available at SSRN 1489975
2008
Earnings volatility, cash flow volatility, and informed trading
Contribution Type: Journal Article, Academic Journal
Journal/Publisher/Proceedings Publisher: Journal of Accounting Research
Volume: 46
Issue: 4
2007
The monitoring role of stock liquidity and the demand for short-term debt
Journal/Publisher/Proceedings Publisher: Working Paper, Olin Business School
2005
Firm value and tax benefits of debt: Large sample evidence of Modigliani and Miller (1963)
Contribution Type: Journal Article, Academic Journal

Current Research Programs

Cross-border Financing by the Industrial Sector Makes the Domestic Banking Sector More Competitive
We predict that access to cross-border financing by the industrial sector reduces firms’ reliance on domestic banks, thereby leading to lower rents for banks and greater competition in the domestic banking sector. To offset these lost rents and remain competitive, we expect banks to increase risky lending. Using mandatory adoption of International Financial Reporting Standards (IFRS) to identify variation in cross-border financing, we find evidence consistent with our hypotheses. Overall, we document how competition from overseas financial markets influences the domestic banking sector.
Who Monitors the Monitor? Bank Capital Structure and Borrower Monitoring
The role that banks play in screening and monitoring their borrowers is well understood. However, these bank activities are costly and unobservable, thus difficult to contract upon. This introduces the possibility of shirking and leads to the question – who monitors the monitor? Financial intermediation theories posit that bank capital structure plays such a role in incentivizing banks to monitor their borrowers. Both bank debt and bank equity have been proposed in various theories as providing the discipline to induce banks to monitor. However, empirical evidence on how bank capital structure influences borrower monitoring is scant. To circumvent identification concerns with regressing (unobservable) bank monitoring on (endogenous) bank capital structure, we use variation in country-level creditor rights to capture banks’ need to monitor their borrowers. We develop a theoretical model in which greater ex-post protection offered to lenders (i.e., banks) during borrower bankruptcy/renegotiation reduces the bank’s ex-ante incentives to monitor. This is because the greater salvage value of bank loans reduces the bank’s expected loss from not monitoring. Our model also examines how banks alter their capital structures in response to changes in their country’s creditor rights, and shows that the reduced demand for bank monitoring induced by stronger creditor rights induces the bank to shift its capital structure away from the source of financing that induces it to monitor. We find empirically that increases in creditor rights result in banks tilting their capital structures away from equity and towards deposits. We verify (theoretically and empirically) that these demand-based tilts in bank capital structure are not explained by supply-side effects (i.e., creditor rights make it cheaper to supply bank debt), and conclude that bank equity is a stronger source of discipline on banks than bank debt. (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2537390 )
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