Murillo Campello, Professor of Finance, Cornell University
We show how uncertainty shapes the asset allocation, composition, productivity, and value of capital-intensive firms. We do so using detailed, near-universal data on shipping firms’ new orders, secondary-market transactions, and demolition of ships. Firms curtail both the acquisition and disposal of vessels in response to heightened uncertainty. The mechanism operates primarily through cuts in new ship orders and demolition of older ships – decisions that are costlier to reverse vis-à-vis deals in the used ship market. These dynamics are more pronounced when secondary ship markets are illiquid, as firms face stronger incentives to delay their decisions. The rise of Somali pirate attacks in 2009-2011 is used as a shock to well-defined shipping sectors to corroborate our findings. Critically, uncertainty prompts firms to concentrate their fleets into narrower, less productive portfolios, leading to value losses. Our work is novel in showing that uncertainty hampers “creative destruction,” slowing both the adoption of innovation embodied in new capital and the disposal of old capital.
Professor Murillo Campello is Lewis H. Durland Professor of Management and Professor of Finance at the Johnson Graduate School of Management. An internationally recognised scholar of financial economics, Campello’s papers have dealt with such issues as the impact of market imperfections on companies, the limits of the firm, product markets, corporate capital structure, monetary policy transmission, financial crises, and econometrics. His work has been cited by prominent policy authorities, such as the Federal Reserve chairman, mentioned in Congressional hearings, described in the “Economic Report of the President,” and used to advise the US Supreme Court. His recent work on the financial crisis has been widely featured in the financial press (Financial Times, Reuters, The Wall Street Journal), books, and academic outlets.
Campello has published extensively in leading finance journals and has served as an associate editor at The Review of Financial Studies, The Journal of Financial and Quantitative Analysis, The Journal of Corporate Finance, and The International Review of Finance. He is currently the co-managing editor of The Journal of Financial Intermediation. He received the biennial “Rising Star” award in 2010 and has been named “Distinguished Referee” by The Review of Financial Studies twice for his referee work on behalf of the journal. His papers were nominated twice for the distinguished Brattle Prize of the Journal of Finance, and he received the Goldman Sachs Best Paper award by The Review of Finance.
Professor Campello is a research associate of the National Bureau of Economic Research. He earned his PhD in finance from the University of Illinois in 2000, an MS in business administration from the Pontifical Catholic University of Rio de Janeiro in 1995, and a BS in economics from the Federal University of Rio de Janeiro in 1991.
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