Lawrence Zhao

703 Flint Ave

Lubbock, TX 79409

(806)834-2366

Welcome!

I am an Assistant Professor of Finance at the Rawls College of Business at Texas Tech University.

My research interests include empirical corporate finance, household finance, competition, and financial intermediation.

Prior to joining Texas Tech University, I earned a B.B.A. in Finance and Mathematics from Baylor University, an M.S. in Economics from Baylor University, and a Ph.D. in Finance from Rice University.

Select Research

Working Paper

The Real Effects of Antitrust Enforcement on Corporate Decisions: Evidence from the Courts

Lawrence Zhao

Working Paper 2023

Abs PDF

I investigate the real effects of antitrust policies on corporate acquisitions, investment, and innovation. I use plausibly exogenous variations in judges’ propensity to dismiss antitrust cases as an instrument for endogenous exposure to antitrust enforcement. The evidence indicates that antitrust enforcement imposes behavioral constraints on firms. Specifically, defendant firms that go through antitrust litigation experience a significant decrease in future acquisitions, especially among serial acquirers. The adverse effect is economically large but transitory, disappearing after two years. Defendant firms substitute acquisitions with internal investment, resulting in no change in patent outputs. My findings highlight the importance of vigorous and continuous antitrust enforcement.
Working Paper

Government Litigation Risk and the Decline in Low-Income Mortgage Lending

Scott Frame, Kristopher Gerardi, Erik Mayer, Billy Xu, and Lawrence Zhao

Working Paper 2024

Abs PDF

We study the effect of Department of Justice lawsuits in the 2010s against large lenders for alleged fraud in the Federal Housing Administration (FHA) mortgage insurance program. The suits led to over $5 billion in settlements and caused targeted banks and their peers to precipitously exit the FHA market. Difference-in-differences and triple differences tests exploiting geographic variation in exposure to exiting banks show a 20% reduction in FHA lending in heavily exposed areas. This reduction was not associated with improved underwriting standards or lower default rates. Large banks’ FHA exit has significantly reduced low-income households’ overall access to mortgage credit.