Published Papers
Bhowal, Subhendu.,Subramanian, Krishnamurthy.,Tantri, Prasanna. (Forthcoming) "Costs Of Job Rotation: Evidence From Mandatory Loan Officer Rotation", Management ScienceRead Abstract >Close >Job rotation inside an organization creates two conflicting effects. It disciplines agents by creating the fear that their successors may discover and report their hidden information. Thus, the agent takes actions that align with the principal's objective. However, job rotation can create a moral hazard. If information is soft and, therefore, non-verifiable, the principal cannot attribute blame to the agent or the successor. Agents shirk, thereby hurting performance. Thus, the importance of disciplining versus moral hazard effects depends on the availability of hard information. Using unique loan-level data, we show that job rotation hinders performance when the information is soft.
Tantri, Prasanna. (Forthcoming) "Creditor Rights and Strategic Default: Evidence from India", Journal of Law and Economics Read Abstract >Close >We examine whether higher creditor rights prevent strategic default. Borrowers who cross either of two thresholds are exempt from a creditor rights law in India. Using a loan day-level dataset, we find that loan performance is better when the law applies and that outperformance increases after a further rise in creditor rights. To discern the strategic motive, we use an unprecedented invalidation of the Indian currency whereby holders of high-value currency were forced to declare their cash holdings to banks. Defaulters exempt from the law showed a greater tendency to repay their loans during the ban period.
Agarwal, Sumit.,Alok, Shashwat.,Chopra, yakshup.,Tantri, Prasanna. (Forthcoming) "Government Employment Guarantee, Labor Supply, and Firms' Reaction: Evidence from the Largest Public Workfare Program in the World", Journal of Financial and Quantitative Analysis Read Abstract >Close >Using establishment-level employment and operating data, we examine the impact of the Indian government's employment guarantee program on labor and firm behavior. We exploit the staggered implementation of the program for identification and find that the program led to a 10% reduction in permanent workforce in firms. Firms responded to the adverse labor supply shock by resorting to increased mechanization. This significantly increased the firms' cost of production, thereby leading to a decline in net profits and productivity. These effects manifested primarily in firms paying low wages, having low labor productivity and greater output volatility, and firms located in states with pro-employer labor regulations.
Jain, Ankit.,Tantri, Prasanna.,Thirumalai, Ramabhadran S. (2019) "Demand Curves For Stocks Do Not Slope Downwards: Evidence Using an Exogenous Supply Shock", Journal of Banking and Finance, 104, 19-30Read Abstract >Close >We analyze the price impact of an exogenous share sale by inside blockholders, who were forced to sell a part of their shareholdings due to a regulatory change in India. The affected firms experience a negative excess return of 4.5% during the issue week. Crucially, the price impact reverses in about 55 to 75 days after the event. Our results are consistent with the view that the long term demand curves for stocks are
at: a view echoed by classical finance theories. The short term price reaction to a sale is likely to be a result of temporary price pressure.
Tantri, Prasanna. (2018) "Contagious Effects of a Political Intervention in Debt Contracts: Evidence Using Loan-Level Data", The Review of Financial Studies, 33 (11), 4556–4592
Sarkar, A.,Subramanian, Krishnamurthy.,Tantri, Prasanna. (2018) "Effects of CEO Turnover in Banks: Evidence Using Exogenous Turnovers in Indian Banks", Journal of Financial and Quantitative Analysis, 54 (1), 183-214Read Abstract >Close >We examine the effect of CEO turnover on earnings management in banks. Since banking is intrinsically an opaque activity, we hypothesize that an incoming CEO of a bank is more likely to manage earnings than a counterpart in a non- financial firm. To identify the hypothesized effects, we exploit exogenous variation generated by age-based CEO retirement policies in Indian public sector firms. Com- pared to banks where there is no turnover, banks experiencing CEO turnover report 23% lower profit-to-sales and 25% lower return-on-assets in the transition quarter. This decrease occurs due to increased provisions, though such provisions do not associate with increased non-performing assets subsequently. Shorter CEO tenure exacerbates earnings management by the incoming CEO. The stock price declines by 1%, and lending is 2% lower than average, which highlight the real effects of earnings management by incoming CEOs. In contrast to banks, we observe no earnings management coinciding with CEO turnover for other public sector firms. As evidence of motivation, we show that earnings management increases likelihood of directorship positions in other firms within two years of retirement.
Mukherjee, Saptarshi.,Subramanian, Krishnamurthy.,Tantri, Prasanna. (2018) "Borrower Distress and Debt Relief: Evidence From a Natural Experiment", Journal of Law and Economics, 614 (4), 607-635Read Abstract >Close >Using unique borrower-level data, we study the causal effect of debt relief on the loan performance of distressed and nondistressed borrowers. We employ a regression discontinuity design that exploits exogenous cutoff dates underlying the 2008 Indian debt waiver program to separate defaulters on loans into beneficiaries and nonbeneficiaries of waivers. By identifying distress before the waiver program using exogenous borrower-level shocks, we examine performance on loans originated after the waiver program. Loan performance of nondistressed beneficiaries worsens, while that of distressed borrowers improves. While existing studies aggregate the effects of debt relief across distressed and nondistressed borrowers, we highlight crucial differences between them
Working Papers
Chopra, Yakshup.,Nagpurnanand, Prabhala.,Tantri, Prasanna. "Bank Accounts for The Unbanked: Evidence from a Big Bang Experiment"
Rajagopal, Shivaram.,Tantri, Prasanna. "Does Mandated Corporate Social Responsibility Reduce Intrinsic Motivation? Evidence from India"Read Abstract >Close >
Tantri, Prasanna.,Thirumalai, Ram.,Subramaniam, KR.,Agrawal, Deepak. "Do Derivatives matter? Evidence from a policy experiment"
