Tom Shohfi 
Assistant Professor of Finance and Accounting

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Working Papers

Bank Loan Renegotiation and Credit Default Swaps

with Brian Clark, James Donato, and Bill Francis
December 2018

We find that the inception of CDS trading on reference firms’ debt is associated with a decreased number and lower probability of amendments, restatements, and rollovers to existing lenders of bank loans. Reference firms are also less likely to terminate loans prematurely or refinance with different lenders after the inception of CDS trading and tend to experience shorter loan renegotiations. Evidence is consistent with the “empty creditor” problem arising from CDS trading and the resulting decrease in the negotiation power of borrowers. Our research contributes to understanding how financial innovations alter bank lending relationships.

Bulk Volume Classification and Information Detection

with Marios Panayides and Jared D. Smith
July 2018

We use stock data from Euronext Paris for which we can identify true trade initiators to test the performance of the Lee and Ready ((1991); LR), tick test, and newly developed bulk volume classification (Easley et al. (2015); BVC) algorithms. BVC is data efficient, but has accuracy rates that are lower than the “bulk” tick test/LR at comparable bar sizes. Part of this accuracy underperformance is driven by systematic biases related to both volume and time bar choices, as well as individual stock characteristics. By calibrating the BVC we are able to mitigate, and in some cases alleviate, the accuracy advantage of the bulk tick test. Further, the calibrated BVC is the only algorithm that can detect informative order flow in a variety of tests, indicating the strong advantage of this method in uncovering the underlying trading intentions of informed traders.

Online Appendix

The Dark Side of Blockholder Philanthropy

with Roger M. White
February 2018

We examine the market reaction to charitable pledges representing the majority of net worth held by blockholders of public firms. Experimental research suggests that such charity brings benefits, as counterparties grant preferential terms when contracting with philanthropic principals. However, these studies abstract from potential agency problems that could arise if a blockholder’s philanthropy signals a weakening preference for wealth maximization (and is indicative of distraction or relaxed monitoring). We find that these agency costs overwhelm any benefits and are most severe where monitoring needs are high and blockholder monitoring is thought to be strict.

Featured at the Harvard Law School Forum on Corporate Governance and Financial Regulation (December 8th, 2016)
Online Appendix

Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing

with Tom Boulton, Bill Francis, and Daqi Xin
October 2018

We use the presence of a Wikipedia article at the time of a firm’s initial public offering (IPO) to test theories of information asymmetry and investor attention. While we find limited support for the former in that IPOs with a Wikipedia article are more likely to experience upward offer price revisions during the roadshow, we find much stronger support for investor awareness. Specifically, IPO firms with a Wikipedia article exhibit significantly higher underpricing in comparison to firms without a Wikipedia article despite the upward price revisions. Importantly, investor awareness has positive long-term effects, as IPO firms with a Wikipedia article benefit from greater analyst following and attract more institutional investors for up to three years following the offering. The Wikipedia-IPO effect is robust to firm-specific Google search volume, news coverage, propensity score matching, and an instrumental variable approach.

Online Appendix

Voice and Action: Sell-Side Analysis and Hedge Fund Activism

with Huimin (Amy) Chen
November 2018

Recent literature has shown hedge fund activism to be an important external corporate governance mechanism. Sell-side analysts, however, provide idea generation and analysis to buy-side clients including hedge funds. Using a propensity score matched sample, we examine sell-side analyst activity around hedge fund activism. We find that declining trends in analyst coverage begin in the year before hedge fund intervention and continue afterward. Stock market responses to analyst reports are negative before hedge fund intervention but revert to positive after. We introduce a new textual analysis dictionary to identify the activism objectives and tactics of Brav, Jiang, Partnoy, and Thomas (2008) within analyst reports and show pre-event sell-side reports contain significantly more language related to subsequent activism. Higher activism dictionary content in sell-side reports is correlated with activism-date target stock performance and predicts multiple activist interventions. Our results suggest that critical voice of sell-side analysis reveals coverage firm flaws that influence subsequent hedge fund intervention outcomes.

Online Appendix

Which Buy-Side Institutions Participate in Public Earnings Conference Calls? Implications for Capital Markets and Sell-Side Coverage

with Andy Call and Nate Sharp
April 2018

The Q&A session of public earnings conference calls represents a unique opportunity for stakeholders to interact with senior management. We examine buy-side analysts’ participation on these calls and the associated capital-market implications. Using 81,000 transcripts for 3,300 companies from 2007 to 2016, we find that buy-side analysts ask questions on approximately 18% of calls. Management prioritizes buy-side analysts but discriminates against analysts from hedge funds when short interest is high. Relative to sell-side analysts, buy-side analysts’ interactions with management are shorter and exhibit less favorable tone and greater uncertainty about the firm’s future prospects. Buy-side analysts’ activity on public conference calls is also associated with increases in information asymmetry and reductions in sell-side activity.

Earnings Conference Call-Level Analyst Participation Data (Stata)
Appendix: List of Participant Institution Classifications


  1. Boulton, Thomas J., Thomas D. Shohfi, and Pengcheng Zhu (2018), "Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions", Journal of Small Business Management, Forthcoming.
  2. Shohfi, Thomas D., RPI’s James Fund: ETFs, Decision Making, and Manager Transitions", Managerial Finance - Special Issue on Student Managed Investment Programs, Forthcoming.

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©2018 Tom Shohfi