Photo of Todd A. Gormley

Todd A. Gormley

Assistant Professor of Finance

Research Interests: applied econometrics, corporate finance, risk and insurance, financial intermediation, emerging markets

Links: Personal Website, PhD lecture notes, CV, Lecture slides for "Common Errors" paper, Guidance on implementing fixed effects estimation

Contact Information

Address: 2458 Steinberg-Dietrich Hall, 3620 Locust Walk, Philadelphia, PA 19104
Office: (215) 746-0496


Todd Gormley is an Assistant Professor of Finance at The Wharton School at the University of Pennsylvania, where he teaches advanced corporate finance in the MBA program and empirical methodologies in the PhD program.  Professor Gormley’s research focuses on two broad questions. First, why do managers sometimes fail to act in the best interest of shareholders, and what governance arrangements mitigate these conflicts? And second, how does financial sector competition affect credit access and the incentives of economic agents?  His recent research examines how passive institutional investors affect firms' governance and the strategies of activist investors and whether managers have an underlying preference to “play it safe” when external governance is weakened.   



PhD, (Economics), Massachusetts Institute of Technology, 2006
BA (Economics, magna cum laude), Michigan State University, 2001

Academic Positions Held

Wharton: 2009-present.
Olin Business School, Washington University in St. Louis, 2006-2009


  • Ian Appel, Todd A. Gormley, Donald B. Keim (Working), Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism.  Abstract
  • Todd A. Gormley, Nandini Gupta, Anand Jha (Under Revision), Quiet Life No More? Corporate Bankruptcy and Bank Competition.  Abstract
  • Ian Appel, Todd A. Gormley, Donald B. Keim (2016), Passive Investors, Not Passive Owners, Journal of Financial Economics, Forthcoming.  Abstract
  • Todd A. Gormley, David A. Matsa (2016), Playing it Safe? Managerial Preferences, Risk, and Agency Conflicts, Journal of Financial Economics, Forthcoming.  Abstract
  • Todd A. Gormley, Donald B. Keim, Ian Appel (Work In Progress), Identification Using Russell 1000/2000 Index Assignments: A Discussion of Methodologies.  Abstract
  • Todd A. Gormley, Simon Johnson, Changyong Rhee (2015), Ending 'Too Big to Fail': Government Promises vs. Investor Perceptions, Review of Finance, 19, 491 - 518.  Abstract
  • Todd A. Gormley, David A. Matsa (2014), Common Errors: How to (and Not to) Control for Unobserved Heterogeneity, Review of Financial Studies, 27 (2).  Abstract  Related Materials
  • Todd A. Gormley (2014), Costly Information, Entry, and Credit Access, Journal of Economic Theory, 154, 633 - 667.  Abstract
  • Todd A. Gormley, David A. Matsa, Todd Milbourn (2013), CEO Compensation and Corporate Risk-Taking: Evidence from a Natural Experiment, Journal of Accounting and Economics, 56 (2-3), 79 - 101.  Abstract  Related Materials
  • Radha Gopalan, Todd A. Gormley (2013), Do Public Equity Markets Matter in Emerging Economies? Evidence from India, Review of Finance, 17, 1571 - 1615.  Abstract  Related Materials
  • Todd A. Gormley, Bong Hwan Kim, Xiumin Martin (2012), Do Firms Adjust Their Timely Loss Recognition in Response to Changes in the Banking Industry?, Journal of Accounting Research, 50 (1), 159 - 196.  Abstract
  • Todd A. Gormley, David A. Matsa (2011), Growing Out of Trouble? Corporate Responses to Liability Risk, Review of Financial Studies, 24 (8), 2781 - 2821.  Abstract
  • Todd A. Gormley, Hong Liu, Guofu Zhou (2010), Limited Participation and Consumption-Saving Puzzles: A Simple Explanation and the Role of Insurance, Journal of Financial Economics, 96 (2), 331 - 344.  Abstract
  • Todd A. Gormley (2010), The Impact of Foreign Bank Entry in Emerging Markets: Evidence from India, Journal of Financial Intermediation, 19 (1), 26 - 51.  Abstract

Awards And Honors

  • Investor Responsibility Research Center Institute Best Paper Award, 2015
  • Rodney L. White Center for Financial Research Grant, 2015-2016
  • Distinguished Referee Award, Review of Financial Studies, 2014
  • Investor Responsibility Research Center Institute Best Paper Award, 2014
  • Marshall Blume Prize in Financial Research, Honorable Mention, 2015
  • Rodney L. White Center for Financial Research Grant, 2014-2015
  • Marshall Blume Prize in Financial Research, Honorable Mention, 2013
  • Jacobs Levy Equity Management Center Research Grant , 2013-2014
  • Marshall Blume Prize in Financial Research, Honorable Mention, 2012
  • Brandywine Global Investment Management Research Fellow, 2012-2013
  • Brandywine Global Investment Management Research Fellowship, 2011-2012
  • Cynthia and Bennett Golub Endowed Faculty Scholar Award, 2011-2012
  • Excellence in Teaching Award -- Wharton MBA Elective, 2011
  • Nominated for Helen Kardon Moss Anvil Award, 2011
  • Most Significant Paper in Journal of Financial Intermediation, 2010
  • Best Paper in Corporate Finance, WFA Meetings, 2009

In The News

  • Bill Ackman Runs an Anti-Index Fund,  -  01/27/2016
  • Passive investors are good corporate stewards, Financial Times  -  01/19/2016
  • America’s Most Popular Investment May Be Toxic, Fortune  -  12/30/2015
  • Money Stuff: Auction Backups and Boring Regulation,  -  07/03/2015
  • Why Peltz Didn’t Have Icahn’s Apple Touch: Activist’s failure to win a board seat at DuPont might have had something to do with the incentives of passive investors, Wall Street Journal  -  05/22/2015
  • Passive, but Powerful: How Index Funds Exercise Their Clout, Knowledge@Wharton  -  04/23/2015
  • Measuring the effects of passive investor aggression, The Daily Deal  -  03/09/2015
  • Passive Investors May Not Be So, Dow Jones Institutional News  -  03/04/2015
  • Passive Investors Play Key Role in Swaying Corporate Governance Choices, Bloomberg BNA  -  02/02/2015
  • Passive Investors, Not Passive Owners, The Harvard Law School Forum on Corporate Governance and Financial Regulation  -  01/21/2015
  • Why Avoiding Risk Can Be Good for Managers but Bad for Shareholders,”, Knowledge@Wharton  -  12/09/2014
  • The Morning Risk Report: CEO Pay is Risky Business, Wall Street Journal online  -  11/14/2013
  • CEO Compensation and Corporate Risk, The Harvard Law School Forum on Corporate Governance and Financial Regulation  -  11/07/2013
  • The Making of a Daredevil CEO: Why Stock Options Lead to More Risk Taking, Knowledge@Wharton  -  07/06/2011


Courses Taught:

FNCE 203 -- Advanced Corporate Finance (Undergraduate)

FNCE 726 -- Advanced Corporate Finance (MBA)

FNCE 899 -- Independent Study Project (MBA)

FNCE 926 -- Empirical Methods in Corporate Finance (PhD)



  • FNCE726 - Advanced Corporate Finance

    The objective of this course is to study the major decision-making areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decision-making ability in these areas. This course serves as an extension of FNCE 611. Some areas of financial management not covered in FNCE 611 are covered in FNCE 726. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning, and working capital management, and some other selected topics. Other areas that are covered in FNCE 611 are covered more in depth and more rigorously in FNCE 726. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy.

  • FNCE926 - Empirical Methods in Corporate Finance

    The course will cover a variety of microeconometic models and methods including panel data models, program evaluation methods [e.g. difference in differences, matching techniques, regression discontinuity design] instrumental variables, duration models, structural estimation [e.g. simulated methods of moments]. The structure of the course consists of lectures, student presentations, and empirical exercises. I will utilize published studies in a variety of fields such as corporate finance, labor economics, and industrial organization to illustrate the various techniques. The goal of the course is to provide students with a working knowledge of various econometric techniques that they can apply in their own research. As such, the emphasis of the course is on applications, not theory.