Gerardo Pérez Cavazos is an Assistant Professor of Business Administration in the Accounting & Management Unit. He teaches the first-year M.B.A. course Financial Reporting and Control.
His research focuses on the role of information in firm decision making and information processing in financial markets. He is also interested in the role of taxation in corporate policies.
Professor Pérez Cavazos received a PhD in accounting and an MBA from The University of Chicago Booth School of Business. Prior to his graduate studies, he earned a bachelor’s degree in economics at the Instituto Tecnológico Autónomo de México and worked in investment banking at Barclays Capital.
Gerardo Pérez Cavazos is an Assistant Professor of Business Administration in the Accounting & Management Unit. He teaches the first-year M.B.A. course Financial Reporting and Control.
His research focuses on the role of information in firm decision making and information processing in financial markets. He is also interested in the role of taxation in corporate policies.
Professor Pérez Cavazos received a PhD in accounting and an MBA from The University of Chicago Booth School of Business. Prior to his graduate studies, he earned a bachelor’s degree in economics at the Instituto Tecnológico Autónomo de México and worked in investment banking at Barclays Capital.
Exploiting the increase in personal tax rates due to the American Taxpayer Relief Act and Healthcare Act, we identify tax-minded executives who exhibit a preference for personal tax savings. We find that 2,281 top executives strategically realized their built-in capital gains prior to the tax hikes to save nearly $741 million in personal taxes in 2012. These executives also (1) make payout policy choices that save their shareholders taxes and (2) make tax strategy choices that save their firms cash taxes. Their firms altered payout policies in 2012, distributing $8 billion in special and accelerated dividends, to save shareholders nearly $700 million in taxes. Further, each tax-minded executive reduces a firm's cash effective tax rate by 0.28%.
I use a unique data set of loans to small business owners to examine whether lenders face negative externalities when they share private information with borrowers. When lenders grant debt forgiveness to borrowers, borrowers communicate that information to other borrowers, who are then more likely to strategically default on their own obligations. This strategic default contagion is economically large. When the lender doubles debt forgiveness, contagion causes the default rate to increase by 10.9% on average. Using an exogenous shock to the lender's forgiveness policy, I further show that as the lender learns about the extent of borrower communication it tightens its debt forgiveness and origination policies to reduce information spillovers and mitigate the default contagion. Collectively, these results provide new evidence on the strategic interactions between a firm and its customers in a dynamic information environment.
Pérez Cavazos, Gerardo, and Suraj Srinivasan. "Accounting for Political Risk at AES." Harvard Business School Teaching Note 118-032, November 2017. (Revised November 2017.)
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In 2006, Mexican convenience store chain OXXO faced a threat from a formidable competitor, the rival convenience chain Extra. OXXO had embarked on an initiative to fortify its corporate culture and operating system, but the threat of Extra raised the question of whether they should focus on opening as many stores as possible and as quickly as possible in order to maintain market leadership. CEO Eduardo Padilla had to define his strategy and decide whether to focus on improving culture and operations or on relentlessly beating his rival.
Marc Cohodes, a renowned short seller, has identified weaknesses in Signet's business strategy, which he argues is heavily reliant on providing loans to customers with subprime credit scores. He believes that the company accounts for its receivables portfolio using recency accounting to hide the problem. The case presents Cohodes' thesis, the response by Signet's management team, as well as the reactions by sell-side analysts.
As a global energy generating company, AES frequently faces challenges from political changes and instability. This is exacerbated by the fact that in many instances AES' primary customer is the government, which is also in charge of law-making. For example, AES' management team has encountered expropriation risks in Venezuela, collection problems in the Dominican Republic, and regulatory changes in the United States that have led to asset impairments. More recently, the Bulgarian energy regulator announced its intentions to seek a 30% price reduction on a power purchase agreement signed over ten years ago with AES. Accordingly, AES' management is evaluating whether the renegotiation will lead to any asset impairments and the overall effects on its financial statements.
