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1309 E. 10th Street
Professor of Finance
Gregg T. and Judith A. Summerville Chair of Finance
Chair, Kelley School of Business Doctoral Programs
Household Finance, Social Networks, Innovation and Asset Pricing
Ph.D., University of Michigan, 2008
B.Com., University of Toronto, 1999
Stoffman, N., Woeppel, M., and Deniz Yavuz, M. (2022). Small Innovators: No Risk, No Return. Journal of Accounting and Economics, 74(1), 101492.
Kleiner, K., Stoffman, N., and Yonker, S. (2021). Friends with Bankruptcy Protection Benefits. Journal of Financial Economics, 139(2), 578-605
Gurun, U., Stoffman, N., and Yonker, S. Unlocking Clients: The Importance of Relationships in the Financial Advisory Industry. Journal of Financial Economics, 141(3), 1218-1243.
Stoffman, N., Kogan, L., and Papanikolaou, D. (2020). Left Behind: Creative Destruction, Inequality, and the Stock Market. Journal of Political Economy, 128(3), 855-906.
Pool, Veronika K., Scott Yonker, Noah Stoffman, and Hanjiang Zhang (2019). Do Shocks to Personal Wealth Affect Risk Taking in Delegated Portfolios? Review of Financial Studies, 32(4), 1457–1493.
Gurun, U. G., Stoffman, N., and Yonker, S. E. (2018). Trust Busting: The Effect of Fraud on Investor Behavior. Review of Financial Studies, 31(4), 1341-1376.
We study the importance of trust in the investment advisory industry by exploiting the geographic dispersion of victims of the Madoff Ponzi scheme. Residents of communities that were exposed to the fraud subsequently withdrew assets from investment advisers and increased deposits at banks. Additionally, exposed advisers were more likely to close. Advisers who provided services that can build trust, such as financial planning advice, experienced fewer withdrawals. Our evidence suggests that the trust shock was transmitted through social networks. Taken together, our results show that trust plays a critical role in the financial intermediation industry.
Kogan, L., Papanikolaou, D., Seru, A. and Stoffman, N. (2017). Technological Innovation, Resource Allocation, and Growth. Quarterly Journal of Economics, 132(2), 665-712.
We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to U.S. firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent-level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations the patent receives in the future. Our new measure is associated with substantial growth, reallocation, and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.
Pool, V. K., Stoffman, N., and Yonker, S. (2015). The People in Your Neighborhood: Social Interactions and Mutual Fund Portfolios. Journal of Finance, 70(6), 2679-2732.
We find that socially connected fund managers have more similar holdings and trades. The portfolio overlap of funds whose managers reside in the same neighborhood is considerably higher than that of funds whose managers live in the same city but in different neighborhoods. These effects are larger when managers are neighbors longer or are of a similar ethnic background, and are not explained by preferences. Valuable information is transmitted through these peer networks: a long-short strategy composed of stocks purchased minus sold by neighboring managers delivers positive risk-adjusted returns. Unlike prior empirical work, our tests disentangle the effects of social interactions from community effects.
Stoffman, N. (2014). Who Trades with Whom? Individuals, Institutions, and Returns. Journal of Financial Markets, 21, 50-75.
Using all trading in Finland over a fifteen-year period, I study the relation between price changes and the trading of individuals and financial institutions. On average, prices increase when institutions buy from individuals, and decrease when institutions sell to individuals. No such consistent pattern is observed when individuals trade with other individuals, or when institutions trade with other institutions. If prices do move while individuals trade among themselves, they quickly revert. These reversals occur as institutions trade with individuals in a direction that pushes prices toward previous levels.
Pool, V. K., Stoffman, N., and Yonker, S. (2012). No Place Like Home: Familiarity in Mutual Fund Manager Portfolio Choice. Review of Financial Studies,25(8), 2563-2599.
Stoffman, N., Seru, A., and Shumway, T. (2010). Learning by Trading. Review of Financial Studies, 23(2), 705-739.
Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect, and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some investors become better at trading with experience, while others stop trading after realizing that their ability is poor. A substantial part of overall learning by trading is explained by the second type. By ignoring investor attrition, the existing literature significantly overestimates how quickly investors become better at trading.