Kasper Meis­ner Nielsen

My research focuses on using economic theory and empirical tools in the areas of corporate finance and household finance. My research strategy is to take advantage of natural experiments to ease identification problems that often confound empirical work. Executives, directors, and owners are unlikely to be randomly assigned to firms, and households are unlikely to be randomly endowed with education, income, and wealth. Except in rare cases where nature provides random variation. The true advantage of natural experiments is that the underlying relation of interest is identified through nature’s random assignment of agents and households into treatment and control groups.

Natural experiments are, as it turns out, often tragic. My research is no exception. I have worked intensively with sudden deaths to identify the value of executives’ and directors’ services to corporations. Sudden death is also helpful in generating windfall wealth to beneficiaries though unexpected inheritance. Windfall wealth allows for a formal test of the impact of liquidity constraints and participation costs on individuals economic decisions. In the real estate market, unnatural deaths lead to forced sales and provide idiosyncratic shocks to the perceived quality of houses, causing negative spillover effects on nearby houses. In a saner experiment, I have used the gender of the first child as instrument for family succession to identify the effect of succession on corporate performance.

If I were to summarize my main contribution to financial economics, I would simply say that it is the careful identification of the underlying economic question, be it family succession, independent directors as a corporate governance mechanism, or participation cost as the main explanation for nonparticipation in the stock market.