ANNA MARIE COSTELLO

Jeffrey Breakenridge Keller Professor of Accounting and Applied A.I.
John E. Jeuck Faculty Fellow
University of Chicago, Booth School of Business

ABOUT

CURRICULUM VITAE

RESEARCH

PRACTICE

TEACHING

CONTACT

Anna's research touches on three key topics: (1) supply chain risk and trade credit, (2) healthcare, and (3) the science of science, specifically related to discrimination. Her work is published in the Journal of Political Economy, the Journal of Financial Economics, the Journal of Accounting Research, the Journal of Accounting and Economics, and The Accounting Review.

Anna is a leading academic in the field of supply chain finance. She has published multiple papers on trade credit - ranging from understanding why it is used so widely, to how it may introduce credit risk spillovers through the corporate economy. Her research is regularly used by companies to assess and hedge against trade credit risk.

Her work in healthcare seeks to understand the role of information and transparency in reducing frictions in the healthcare context. For instance, she has partnered with several large hospital systems to deploy information on cost savings opportunities in operating room procedures, a project which has saved hospitals several million dollars annually.

Finally, she studies the forces that contribute to success in academia, specifically focusing on the role of gender in academic publishing.

In recognition of research achievements, Anna was awarded both the Paton and Drebin Faculty Fellowship and the Sanford R. Robertson Junior Faculty Award. She also received the Best Dissertation Award from the Financial Accounting and Reporting Section of the American Accounting Association. Anna also brings her research insights into the classroom; for her teaching excellence, she was awarded the MIT Sloan top teaching award in 2015: MBA Teacher of the Year.

Anna is a Senior Editor at the Journal of Accounting Research.

CURRICULUM VITAE

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RESEARCH

PUBLICATIONS | WORKING PAPERS

PUBLICATIONS

"Discrimination in the Payments Chain"

with Michael Minnis

Journal of Financial Economics Volume 158, August 2024, 103872.

We examine whether discrimination against firms' credit managers affects their ability to collect trade payments during the COVID-19 pandemic. The ability to collect from customers varies based on who the supplier's trade credit officer is: credit officers who are either female or African American saw a 20-30% larger increase in overdue bills at the onset of COVID-19, relative to suppliers with non-minority credit officers.
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"Credit Market Disruptions and Liquidity Spillover Effects in the Supply Chain"

Journal of Political Economy 128 (2020): 3434-3468.

Cited by the Federal Reserve Bank of New York in motivating their monetary response to COVID. Available at https://www.newyorkfed.org/newsevents/speeches/2020/sin201020

Suppliers exposed to an exogenous decline in bank financing pass this liquidity shock on to their downstream customers. The spillover results in a spike in credit risk and a reduction in employment for downstream customers, highlighting the importance of liquidity spillovers on corporate sector outcomes.
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"Machine + Man: A field experiment on the role of discretion in augmenting AI-based lending models"

with Andrea Down and Mihir Mehta
Journal of Accounting and Economics (2020): 101360.

Using a randomized controlled experiment, our study analyzes how augmenting a machine-based lending model with additional human discretion impacts loan outcomes.
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"The value of collateral in trade finance"

Journal of Financial Economics 134 (2019): 70-90.

The paper demonstrates the important role of legal protections - specifically the supplier's right to reclaim collateral - in supporting inter-firm trade.
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"Do Strict Regulators Increase the Transparency of Banks?"

with Joao Granja and Joseph Weber
Journal of Accounting Research 57 (2019): 603-637.

We investigate the role that regulatory strictness plays in enforcing financial reporting transparency in the U.S. banking industry. We find that strict regulators enforce more restatements of bank call reports.
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"The Impact of Balanced Budget Restrictions on States' Fiscal Actions"

with Reining Petacchi and Joseph Weber
The Accounting Review 92 (2017): 51-71.

Politicians facing budget constraints shift money from funds that do not face balanced budget rules into funds that must meet the balanced budget. We also show that politicians in states with strict budget rules sell public assets - often at fire sale prices - to close budget shortfalls.
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"Mitigating Incentive Conflicts in Inter-Firm Relationships: Evidence from Long-Term Supply Contracts"

Journal of Accounting and Economics 56 (2013): 19-39.

Examining a large sample of long-term supply contracts, I show that managers design supply contracts in anticipation of future economic frictions such as hold-up costs and information asymmetry. The study highlights the role of financial reporting in monitoring supply chain partners.
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"The impact of financial reporting quality on debt contracting: Evidence from internal control weakness reports."

with Regina Wittenberg-Moerman
Journal of Accounting Research 49 (2011): 97-136.

We show that lenders rationally account for the quality of financial reports when choosing the mix of features to include in the loan contract. Specifically, lenders substitute away from financial-reporting-based features when the borrower has a SOX internal control weakness.
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"The Long and Short of It: The Post-Crisis Corporate CDS Market"

with Nina Boyarchenko and Or Shachar
Economic Policy Review 26 (2020): 1-48.

This paper utilizes supervisory, contract-level, credit default swap data (from the DTCC) to provide new insights on the decisions made by participants in the CDS market.
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WORKING PAPERS

"Editing a Woman's Voice"

with Ekaterina Fedorova, Zhijing Jin, and Rada Mihalcea

Using academic publishing as a setting, we find that female authors exhibit more linguistic uncertainty, relative to males, when discussing the inferences of their work. Importantly, this gender differential in uncertain language does not appear during first drafts of papers, but women increase their use of cautionary language through the publication process more than men. We show this increase in the linguistic gender gap varies substantially based on editor assignment. Overall, our study suggests that a woman's "voice" is partially shaped by external forces, and it highlights the critical role of editors in shaping how female academics communicate.
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"Representations of Investor Beliefs"

with Bradford Levy and Valeri Nikolaev
R&R, Review of Financial Studies

This study uses large language models to model the novelty, or "surprise" of a given piece of information, relative to all information that the firm had previously disclosed. Specifically, we train LLMs using data from the financial domain to model investors' prior beliefs over narrative content and, thus, identify new information that a company communicates. We show that our measure of new information explains a large portion of market response to disclosed information and predicts firms' future returns.
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"Doctor's Orders: A Field Experiment on Fiscal Responsibility in Healthcare"

with Henry Eyring and Eric Floyd

To help address the rising costs of health care, we conduct a field experiment that aims to reduce the cost of supplies used in surgical procedures. Specifically, we develop an algorithm to identify plausible "swaps" in common supplies used in operating rooms, which would generate considerable savings but would not have any adverse impacts on patient outcomes (e.g., gauze). Partnering with three large hospital systems, we randomize incentives to encourage physicians to accept our swaps and generate large cost savings at each hospital.
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"Pills, Powders, and Proof"

with Christian Friedrich and Gerrit von Zedlitz-Neukirch

In this study, we explore the recreational illicit drug market, where poor information about product quality can lead to acute toxicity and death. Specifically, we ask whether product-level transparency, provided through drug checking initiatives, can lead to safer drug consumption and fewer adverse health outcomes. The paper uses both archival data, as well as a field experiment where we randomize the availability of drug checking within nightclubs. Using RFID technology to track movements throughout the club as well as exit surveys, we assess the effects of drug checking on consumption choice, harm reduction and health outcomes. Overall, our study seeks to assess the effectiveness of product transparency in reducing harm in the illicit drug market.
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PRACTICE

Anna's work as a leading academic in the field of supply chain finance, small business lending and payments has been acknowledged in multiple forums around the world. She has a work ethic and sharpness of mind that helped Credit2B build a highly predictive business risk platform leveraging alternative data, AI and ML. Plus she was super with our clients.

Shyarsh Desai, CEO of Credit2B

Anna's research is used by trade credit professionals and the companies that serve them. She was on the advisory board of Credit2B from 2015 until they were acquired in 2018. She serves as a keynote speaker at annual meetings and trade associations, and her research has been used to develop credit models and hedging strategies related to trade credit.

She has served in an advisory role for many companies including those listed below.

TEACHING

Anna's courses include:

  1. Internal Information for Strategic Decisions
    2. Download Syllabus
  2. Strategic Decision Making for the CFO
  3. Foundations of Accounting Research
    4. Download Syllabus
  4. Accounting for Private Entities and Non-Investor Stakeholders
    5. Download Syllabus

She consistently receives teaching ratings at the very top of the programs in which she teaches, earning an average of 4.5/5.0 at Booth, 4.7/5.0 at Michigan, and an average of 6.8/7.0 at MIT. In 2015, she was honored to win MIT Sloan's top teaching award: MBA Teacher of the Year.

CONTACT

Anna M. Costello
Email: Anna.Costello@chicagobooth.edu
Phone: 574-514-5126

University of Chicago
Booth School of Business
Chicago, IL 60637