Photo of David Musto

David Musto

Ronald O. Perelman Professor in Finance

Department Chair

Research Interests: capital markets, consumer credit, financial intermediation

Links: CV

Contact Information

Address: 2323 Steinberg-Dietrich Hall, 3620 Locust Walk, Philadelphia, PA 19104
Email: musto@wharton.upenn.edu
Office: (215) 898-4239

Overview

Education

PhD, University of Chicago, 1995; BA, Yale University, 1987

Academic Positions Held

Wharton: 1995-present(named Ronald O. Perelman Associate Professor in Finance, 2007; Professor, 2008)

Other Positions

Programmer, Trout Trading Company, 1993; Systems Consultant, Roll & Ross Asset Management, 1987-89

Research


  • David Musto, Gregory Nini, Krista Schwarz (Working), Notes on Bonds: Liquidity at all Costs in the Great Recession.  Abstract  Related Materials
  • Rich Evans, Christopher Geczy, David Musto, Adam V. Reed (2009), Failure is an Option: Impediments to Short Selling and Options Prices, Review of Financial Studies, Forthcoming.  Abstract
  • Philip Bond, David Musto, Bilge Yilmaz (2009), Predatory Mortgage Lending, Journal of Financial Economics, 94, 412 - 427.  Abstract
  • Susan E. K. Christoffersen, Donald B. Keim, David Musto (Working), Valuable Information and Costly Liquidity: Evidence from Individual Mutual Fund Trades.    Abstract
  • Christopher Geczy, Susan Christoffersen, David Musto, Adam Reed (2007), Vote Trading and Information Aggregation, Journal of Finance  Abstract
  • David Musto, Nicholas S. Souleles (2006), A Portfolio View of Consumer Credit, Journal of Monetary Economics, 53 (1), 59 - 84.  Abstract
  • Susan Christoffersen, Christopher Geczy, David Musto, Adam Reed (2005), Cross-Border Dividend Taxation and the Preferences of Taxable and Non-Taxable Investors: Evidence from Canada, Journal of Financial Economics, Vol. 78 (Issue 1), 121 - 144. doi: 10.1016/j.jfineco.2004.08.004.  Abstract
  • Simon Gervais, Anthony W. Lynch, David Musto (2005), Fund Families as Delegated Monitors of Money Managers, Review of Financial Studies, 18 (4), 1139 - 1169.  Abstract
  • David Musto (2004), What Happens when Information Leaves a Market? Evidence from Post-Bankruptcy Consumers, Journal of Business, 77 (4), 725 - 748.  Abstract
  • David Musto, Anthony W. Lynch (2003), How Investors Interpret Past Fund Returns, Journal of Finance, 58 (5), 2033 - 2058.  Abstract
  • David Musto, Bilge Yilmaz (2003), Trading and Voting, Journal of Political Economy, 111 (5), 990 - 1003.  Abstract
  • David Musto, Susan E. K. Christoffersen (2002), Demand Curves and the Pricing of Money Mangement, Review of Financial Studies, 15 (5), 1499 - 1524.  Abstract
  • Mark Carhart, Jennifer Carpenter, Anthony W. Lynch, David Musto (2002), Mutual Fund Survivorship, Review of Financial Studies, 15 (5), 1439 - 1463.  Abstract
  • Christopher Geczy, David Musto, Adam Reed (2002), Stocks are Special Too: An Analysis of the Equity Lending Market, Journal of Financial Economics, 241-269.  Abstract
  • Mark Carhart, Ron Kaniel, David Musto, Adam V. Reed (2002), Leaning for the Tape: Evidence of Gaming Behavior in Equity Mutual Funds, Journal of Finance, 57 (2), 66 - 693.  Abstract
  • David Musto (1999), Investment Decisions Depend on Portfolio Disclosures, Journal of Finance, 54 (3), 935 - 952.  Abstract
  • David Musto (1997), Portfolio Disclosures and Year-End Price Shifts, Journal of Finance, 52 (4), 1563 - 1588.  Abstract

In The News

Courses

Current

  • FNCE891 - ADVANCED STUDY PROJECT - CORPORATE RESTRUCTURING

    The objective of this course is to familiarize students with financial, legal and strategic issues associated with the corporate restructuring process. The main focus of the course will be on the restructuring of financially distressed firms. We'll begin by reviewing the financial instruments commonly used by risky firms (leveraged loans and high-yield bonds) and learn to interpret the contracts that govern them. We'll then survey a variety of restructuring methods (out-of-court workouts, exchange offers, prepackaged and pre-negotiated bankruptcies, Chapter 11 reorganizations, international insolvency practices) available to troubled firms and study the dynamics of the restructuring process through a number of historical and current case studies. Finally, we'll consider distressed debt as an asset class and develop techniques for investing in distressed securities. The course will provide students with tools to value distressed companies, understand the legal framework governing bankruptcy and reorganization, and navigate the key strategic issues facing managers and investors in distressed companies. It willalso provide students with a specialized vocabulary and important facts about the restructuring industry, distress investing, and leveraged financial markets.

    FNCE891701 

    FNCE891751 

Previous

  • FNCE238 - Capital Markets - Formerly Funding Investments

    This course examines the available corporate securities that firms can use to finance investment. The course will focus on: (1) the design of these securities (Why do bonds have embedded options? What is the role of preferred stock?); (2) the issuing process for these securities (What do investment banks do? Is the underwriting process important for the cost of capital?); (3) the pricing of these securities (How are credit risk in bonds and loans priced?) The securities covered include corporate and junk bonds, bank loans, common and preferred equity, commercial paper, securitization, as well as some recent innovations. Other topics include: the role of embedded options in corporate bonds; the role of bank and loan covenants; the function of bond rating agencies; exchange offers; prepackaged bankruptcies; bankruptcy in Chapter 11; workouts; debtor-in-possession financing; and pricing credit risk. The course is designed to be complementary to Advanced Corporate Finance and Fixed Income Securities.

  • FNCE738 - Capital Markets - formerly Funding Investments

    This course examines the available corporate securities that firms can use to finance investment. The course will focus on: (1) the design of these securities (Why do bonds have embedded options? What is the role of preferred stock?); (2) the issuing process for these securities (What do investment banks do? Is the underwriting process important for the cost of capital?); (3) the pricing of these securities (How are credit risk in bonds and loans priced?) The securities covered include corporate and junk bonds, bank loans, common and preferred equity, commercial paper, securitization, as well as some recent innovations. Other topics include the role of embedded options in corporate bonds; the role of bank and loan covenants; the function of bond rating agencies; exchange offers; prepackaged bankruptcies; bankruptcy Chapter 11; workouts; debtor-in-possession financing; and pricing credit risk. The course is designed to be complementary to Advanced Corporate Finance and Fixed Income Securities.

  • FNCE891 - ADVANCED STUDY PROJECT - CORPORATE RESTRUCTURING

    The objective of this course is to familiarize students with financial, legal and strategic issues associated with the corporate restructuring process. The main focus of the course will be on the restructuring of financially distressed firms. We'll begin by reviewing the financial instruments commonly used by risky firms (leveraged loans and high-yield bonds) and learn to interpret the contracts that govern them. We'll then survey a variety of restructuring methods (out-of-court workouts, exchange offers, prepackaged and pre-negotiated bankruptcies, Chapter 11 reorganizations, international insolvency practices) available to troubled firms and study the dynamics of the restructuring process through a number of historical and current case studies. Finally, we'll consider distressed debt as an asset class and develop techniques for investing in distressed securities. The course will provide students with tools to value distressed companies, understand the legal framework governing bankruptcy and reorganization, and navigate the key strategic issues facing managers and investors in distressed companies. It willalso provide students with a specialized vocabulary and important facts about the restructuring industry, distress investing, and leveraged financial markets.