Jung Min Kim

• Paul Fischer, Mirko S. Heinle, Jung Min Kim, Christina Zhu (Working), Rational Information Acquisition Screens. Abstract

  We develop a model of information acquisition in capital markets and test its predictions in the data. In the model, investors are uncertain about the returns to acquiring private information before they acquire it. As a result, investors use prior prices and public information as a screen to estimate the value of private information acquisition and efficiently allocate their limited information-processing capacity across firms. The model predicts that larger unexplained price movements lead to more private information acquisition, higher future price volatility, and higher future trading volumes. Using fine-grained data measuring information acquisition on Edgar and Bloomberg, we provide empirical evidence in support of the model’s predictions.

• Jung Min Kim, Uncertainty about Managerial Horizon and Voluntary Disclosure (Review of Accounting Studies, forthcoming). Abstract

  I examine the relation between investors’ uncertainty about managerial horizon and corporate voluntary disclosure. I argue that investors’ uncertainty about the manager’s short-term stock price concern works as a disclosure friction that allows for a partial disclosure equilibrium. When investors are uncertain about managers’ horizons, short-horizon managers can withhold bad news by pooling with long-horizon managers who are not motivated to disclose regardless of the content of the news, as they are largely indifferent to short-term stock prices. Based on this theoretical framework, I hypothesize that reducing investors’ uncertainty about managerial horizon reduces this disclosure friction, thereby pressuring short-horizon managers to provide more voluntary disclosure. I use the executive compensation disclosure mandate as an empirical setting that reduced investors’ uncertainty about managerial horizon. Employing a difference-in-differences research design, I find a significant increase in voluntary disclosure for treated firms relative to control firms, largely driven by firms with short-horizon managers.

• Jung Min Kim, Information Search and Financial Misreporting (Job Market Paper). Abstract

  I examine how investors’ search for different types of information affects the manager’s reporting decisions. I distinguish investors’ search for information about firm fundamentals (“fundamental search”) from their search for information about the manager’s incentives (“incentive search”). Based on a parsimonious model of misreporting, I show that fundamental search reduces the earnings response coefficient, which reduces a manager’s benefits from misreporting, resulting in less misreporting. In contrast, incentive search increases the earnings response coefficient, which increases the benefits from misreporting, resulting in more misreporting. I develop an empirical technique for classifying EDGAR downloads as fundamental search or incentive search and link these empirical proxies to measures of price efficiency, earnings response coefficients, and intentional restatements. Consistent with my theoretical predictions, I find that both fundamental and incentive search are positively associated with price efficiency, but that fundamental (incentive) search is negatively (positively) related to the earnings response coefficients and restatements. Collectively, the results highlight the importance of distinguishing the different types of information search.

• Jung Min Kim, Daniel Taylor, Robert E. Verrecchia (2021), Voluntary Disclosure when Private Information and Disclosure Costs are Jointly Determined (Review of Accounting Studies), . Abstract

  Classical models of voluntary disclosure feature two economic forces: the existence of an adverse selection problem (e.g., a manager possesses some private information) and the cost of ameliorating the problem (e.g., costs associated with disclosure). Traditionally these forces are modelled independently. In this paper, we use a simple model to motivate empirical predictions in a setting where these forces are jointly determined––where greater adverse selection entails greater costs of disclosure. We show that joint determination of these forces generates a pronounced non-linearity in the probability of voluntary disclosure. We find that this non-linearity is empirically descriptive of multiple measures of voluntary disclosure in two distinct empirical settings that are commonly thought to feature both private information and proprietary costs: capital investments and sales to major customers.

• Jung Min Kim, Daniel Taylor, Jared N Jennings, Joshua A. Lee, Measurement Error and Bias in Causal Models in Accounting Research. Abstract

  Measurement error biases against [finding results]” is an often-repeated phrase used to dismiss validity threats arising from measurement error. As a general rule, this phrase is false. We provide examples of commonly encountered circumstances where the variable of interest is exogenous––the gold standard for causal inference––but where measurement error in empirical proxies nonetheless bias in favor of rejecting a true null hypothesis. In addition, we show that the common practice of including high-dimensional fixed effects, specifically firm fixed effects, can exacerbate this bias and lead researchers to spuriously estimate a causal effect when none exists. Finally, we show that measurement error pervades the accounting literature, and illustrate the effect of measurement error on causal inferences in a popular quasi-natural experimental setting where we can observe the measurement error in the treatment variable. We encourage researchers to triangulate inferences across multiple empirical proxies and to report results from specifications with and without high-dimensional fixed effects.

Past Courses

• ACCT1010 - Acct & Financial Report

  This course is an introduction to the basic concepts and standards underlying financial accounting systems. Several important concepts will be studied in detail, including: revenue recognition, inventory, long-lived assets, present value, and long term liabilities. The course emphasizes the construction of the basic financial accounting statements - the income statement, balance sheet, and cash flow statement - as well as their interpretation.

Deloitte Foundation Doctoral Fellowship Award, 2021

George James Doctoral Fellowship, 2017

Seoul National University Class of 2016 President Award, 2016

Knowledge @ Wharton

• The Regulatory Challenges of AI in Finance, Knowledge @ Wharton - 11/25/2024
• Building Stronger Family Offices by Sharing Knowledge and Securing the Future, Knowledge @ Wharton - 11/21/2024
• State of the NBA with Seth Partnow, Knowledge @ Wharton - 11/20/2024
• How Are Companies Really Using AI? A New Report Has Answers, Knowledge @ Wharton - 11/19/2024
• Impact vs. Time: A Leader’s Guide to Slow Productivity, Knowledge @ Wharton - 11/19/2024
• Kevin O’Leary Illustrates the Benefits of Tariffs for U.S. Businesses, Knowledge @ Wharton - 11/19/2024
• Boosting Donations Through Self-expressive Choices | Jonah Berger, Knowledge @ Wharton - 11/19/2024
• Why Are Hospitals So Expensive?, Knowledge @ Wharton - 11/18/2024
• New Phenomena in Behavioral and Social Investing, Knowledge @ Wharton - 11/18/2024
• Bigger Hospitals, Better Care? Wharton Research Finds Benefits Are Only at the Operational Level, Knowledge @ Wharton - 11/14/2024