Maclean (Mac) Gaulin is an assistant professor at the David Eccles School of Business, University of Utah. His background is in Electrical Engineering where he worked in the industry for four years before joining the Ph.D. program at Rice University. His research interests include corporate narrative disclosures, information demand, dissemination, and resultant economic outcomes.


What drives the Effectiveness of Social Distancing in Combating COVID-19 across U.S. States?

By Mu-Jeung Yang, Maclean Gaulin, Nathan Seegert, Adam Looney

We combine structural estimation with ideas from Machine Learning to estimate a model with information-based voluntary social distancing and state lockdowns to analyze the factors driving the effect of social distancing in mitigating COVID-19. The model allows us to estimate how contagious social interactions are by state and enables us to control for several unobservable, time-varying confounders such as asymptomatic transmission, sample selection in testing and quarantining, and time-varying fatality rates. We find that information-based voluntary social distancing has saved three times as many lives as lockdowns. Second, information policy effects are asymmetric: 'least informed' responses would have implied 240,000 more fatalities by June 2020 while 'most informed' responses would have saved 25,000 more lives. Third, our estimates suggest that contagion externalities from social interactions are large enough that a lockdown response could have been 25% less costly for the median state and still saved an equivalent number of lives.

What is the True Active Prevalence of COVID-19?

By Mu-Jeung Yang, Nathan Seegert, Maclean Gaulin, Adam Looney, Brian Orleans, Andrew T. Pavia, Kristina Stratford, Matthew Samore, Steven Alder

We provide a method to track active prevalence of COVID-19 in real time, correcting for time-varying sample selection in symptom-based testing data and incomplete tracking of recovered cases and fatalities. Our method only requires publicly available data on positive testing rates in combination with one parameter, which we estimate based on a representative randomized field study of nearly 10,000 individuals in Utah. The method correctly predicts prevalence in two state-wide, representative randomized testing studies. Applying our method to all 50 states we show that true prevalence is 2–3 times higher than publicly reported.

Disclosure of Protected Forward Looking Statements

By Daniela De la Parra, Maclean Gaulin, and K. Ramesh

We provide the first examination of the determinants of firms' decision to use a list of keywords in SEC filings to identify forward-looking statements and obtain 'safe harbor' protection under the Private Securities Litigation Reform Act. We show that proxies for ex ante litigation risk, disclosure supply, economic uncertainty, and disclosure herding are strongly associated with the decision to include the keyword list. In addition, when we examine the determinants of the number of keywords, we find that both structural variables and proxies for transient forces are statistically significant, with the latter being consistent with lower disclosure costs. Finally, using exploratory factor analysis, we identify five disclosure attributes that capture the most frequent keywords that managers choose. We find that managers use specific keywords that evolve over time, potentially to tailor the language of their forward-looking statements to reflect the economic circumstances they face. Together this evidence provides an important first look at the determinants of firms' decisions regarding a central feature of 'safe harbor' protection.

The Salience of Creditors' Interests and CEO Compensation

By Brian Akins, Jonathan Bitting, David De Angelis, Maclean Gaulin

This paper shows that firms adjust CEO compensation policies when creditors' interests are more salient. This effect helps explain controversial compensation practices such as weak performance incentives and short pay duration. Our findings also show that to mitigate the agency cost of debt, compensation contracts can reflect not only the firm's capital structure but the debt contract itself. For example, firms tend to contract on accounting-based goals when creditors do as well. Our analysis relies on a regression discontinuity design around loan covenant violations. We also confirm our conclusions studying a broad sample of financially constrained firms seeking debt financing.

Risk Fact or Fiction: The information content of risk factor disclosures

By Maclean Gaulin

I find that managers time their identification of new risk factors and removal of previously identified ones to align with the expected occurrence of future adverse outcomes. By using individual risk factors as the unit of disclosure, I am able to provide novel evidence that managers remove stale disclosures on a timely basis. My results are inconsistent with concerns of uninformative boilerplate or purely 'copy and paste' disclosure. To shed light on what shapes the disclosure equilibrium, I study the managerial response to demand 'shocks' from public and private enforcement actions. The results show that firms respond to investor demand in a manner consistent with the litigation shield hypothesis, and that this effect persists for multiple years. Consistent with the regulatory cost-benefit function, public enforcement does not result in a net increase in disclosed risk factors, but does evoke more definitive disclosures through more specific language and an increased use of numbers.

Debt Contracting on Management

By Brian Akins, David De Angelis, Maclean Gaulin

Change of management restrictions (CMRs) in loan contracts give lenders explicit ex-ante control rights over managerial retention and selection. This paper shows that lenders use CMRs to mitigate risks arising from CEO turnover, especially those related to the loss of human capital and replacement uncertainty, thereby providing evidence that human capital risk affects debt contracting. With a CMR in place, the likelihood of CEO turnover decreases by more than half, and future firm performance improves when retention frictions are important, suggesting that lenders can influence managerial turnover, even outside of default states, and help the borrower to retain talent.