Suhas A. Sridharan joined the Goizueta Business School faculty in 2015. She earned a PhD in business administration from Stanford University's Graduate School of Business. Her research focuses on the role of information in the price discovery process in capital markets. Professor Sridharan's work has appeared in academic journals such as The Accounting Review and Review of Accounting Studies, and media outlets such as The Wall Street Journal, Financial Times, and Bloomberg News. Prior to joining Goizueta, Sridharan was a member of the faculty at the UCLA Anderson School of Management.
Areas of Expertise (5)
Financial Statement Analysis
Information and Price Discovery in Financial Markets
Stanford University Graduate School of Business: PhD, Business Administration 2013
Emory University: BA, Economics, Mathematics, and Computer Science 2008
Media Appearances (3)
Passive’s aggressive march poses thorny questions
Financial Times online
While the performance of fund managers has improved this year, the torrential inflows into cheap exchange traded funds has continued unabated.
ETFs Create Stock Markets That Are Both Mindless and Too Expensive, Study Says
Bloomberg Markets online
Higher ownership of individual stocks by ETFs widens the bid-ask spreads in those shares, making them more expensive to trade and therefore less attractive.
The Downside of ETFs
The Wall Street Journal online
There is a lot for investors to like about exchange-traded funds, but there is also a downside for the stock market, a new study says. Many investors like ETFs because the funds are an easy way to build a diverse portfolio with fees that generally are lower than those of mutual funds.
2015 We examine whether an increase in ETF ownership is accompanied by a decline in pricing efficiency for the underlying component securities. Our tests show an increase in ETF ownership is associated with: (1) higher trading costs (bid-ask spreads and market liquidity); (2) an increase in “stock return synchronicity”; (3) a decline in “future earnings response coefficients”; and (4) a decline in the number of analysts covering the firm. Collectively, our findings support the view that increased ETF ownership can lead to higher trading costs and lower benefits from information acquisition. This combination results in less informative security prices for the underlying firms.
2013 This paper examines whether financial statement information can predict future realized volatility incremental to the volatility implied by option market prices. Prior research establishes that option-implied volatility is a biased estimator of future realized volatility. I use an analytical framework to identify accounting-based drivers of equity returns volatility. My main hypothesis is accounting-based drivers can be used to forecast future volatility incremental to either past volatility or the market’s expectation of future volatility quantified as option-implied volatility. I confirm this empirically and show that my findings are robust to the measurement of option-implied volatility using either a model-free approach or the Black-Scholes model. I also document abnormal returns to a option-based trading strategy that takes a long (short) position in firms with financial statement information indicative of high (low) future volatility. Additionally, I provide evidence that contradicts a risk-based explanation for the incremental predictive ability of accounting-based variables. Taken together, my results indicate that the market’s failure to fully process accounting-based fundamental information explains some of the previously documented bias in implied volatility.