Research

Money Management and Welfare, with Simon Gervais, February 2026.

We develop a rational expectations equilibrium model of active money management in which fund managers’ trades affect firms’ real investment through financial market prices. Three results emerge. First, as more investors delegate capital, fund portfolios converge to the market portfolio, reducing measured outperformance. Second, while gross alpha is positive, net alpha can be negative in equilibrium, especially when hedging motives are strong or productivity is difficult to learn. Third, negative net alpha does not imply that delegation is socially undesirable: by improving capital allocation, active money management can still raise aggregate welfare.

The Effect of Speculative Monitoring on Shareholder Activism, February 2018.

This paper investigates how informed trading in financial markets affects the incentive of a large shareholder to monitor a company. The shareholder engages in costly monitoring activities to the extent that she can profitably trade on her private information about these activities. By making stock prices more informative about these activities, informed trading increases the shareholder's incentive to undertake such value-enhancing activities in case she has to liquidate her stake before their effect is publicly observed. This reduces the size of the stake that the shareholder has to acquire to commit to her desired level of monitoring. At the same time, a more informative stock price reduces the value of the shareholder's private information and hence her benefit from monitoring. If acquiring a large stake is excessively costly to the shareholder, the former effect dominates and an increase in informed trading can lead to an increase in monitoring efforts. In this case, there is a complementarity between shareholder activism and informed trading, and multiple equilibria with different levels of ownership concentration and monitoring may coexist.