About

Karthik Balakrishnan is a leading researcher in accounting who teaches financial accounting and financial statement analysis. He has received multiple awards for his teaching from Rice students, including in 2021 and 2022. Prior to joining Rice Business, Karthik was at the London Business School, where he taught financial accounting to MBA, EMBA (London and Dubai), MiM, and doctoral students, and received the London Business School’s Excellence in Teaching Award in 2019. Before that, he was at the Wharton School of the University of Pennsylvania. His research investigates the economic consequences of corporate disclosure, financial reporting, and disclosure regulations, with a recent focus on financial reporting regulations in the banking sector. His research interests include accounting issues related to financial intermediaries and the implications of accounting for the functioning of capital markets. He holds a PhD from New York University and has published in leading academic journals such as the Journal of Finance, Journal of Accounting and Economics, Journal of Accounting Research, and The Accounting Review. He is regularly invited to give talks at leading academic institutions worldwide and has presented his research at highly selective conferences.

Research topics

• Computer Science
• Business
• Finance
• Political Science
• Economics
• Financial economics
• Econometrics
• Law
• Telecommunications
• Accounting
• Actuarial science
• Financial system
• Microeconomics

Selected publications

• Assessing Implementation of Current Expected Credit Loss (CECL) using Bank Deposit Interest Rates

  SSRN Electronic Journal · 2026-01-01

  preprintOpen access
  PublisherDOI

• Racial Diversity Exposure and Firm Responses Following the Murder of George Floyd

  UNC Libraries · 2025-03-29

  articleOpen accessSenior author

  George Floyd's murder caused many firms to reveal how exposed they are to racial diversity issues. We examine investor and firm behaviors after this socially significant event to provide evidence on the valuation effects of the exposure and ensuing corporate responses. We develop a text‐based measure of a firm's exposure to racial diversity issues from conference call transcripts and find that, after the murder of George Floyd, firms with diversity exposure experience a stock price decrease of approximately 0.7% around the date of the conference call. We provide evidence that this effect is attributable to race‐related exposure and not gender‐related exposure. Initiatives taken by firms mitigate the negative market reaction. We document that firms with racial diversity exposure respond by appointing Black directors. The stock market views appointments of Black directors more favorably after George Floyd's murder, except when they are perceived as symbolic. We also find that firms with greater exposure to racial diversity are more likely to establish diversity, equity, and inclusion (DEI) departments, appoint DEI leaders, specify diversity goals, increase supply chain diversity, and donate to racial justice causes. Our paper provides evidence that exposure to racial diversity issues adversely affects firm value, and companies address the exposure by taking actions.

  PublisherDOI

• Public Information, Relative Overconfidence, and Capital Flows

  Journal of Accounting Research · 2025-12-08

  article1st authorCorresponding

  ABSTRACT Capital flows increase in response to new public information. Conventional explanations typically conclude that this reflects a rational response to reduced risk. However, investors may also be overconfident in their ability to benefit from new information, even when it is publicly available and does not provide a relative advantage. We exploit two complementary settings to examine how this “better‐than‐average” mechanism affects capital flows. Archival evidence from horse race betting markets shows capital flows increase following the public provision of a summary measure of horse performance, even though more total parimutuel wagering necessarily implies a greater wealth transfer from bettors to tracks. A controlled lab experiment provides direct causal evidence of our proposed mechanism. Combined, our results suggest that new public information can increase capital flows due to investors’ overconfidence in their ability to benefit from information relative to others. Our findings inform regulators seeking to understand the consequences of expanding the public information available to individual investors.

  PublisherDOI

• Time-series Variation in Implied Costs of Capital: Evidence from Test of Intertemporal Capital Asset Pricing Model Predictions*

  SSRN Electronic Journal · 2024-01-01

  articleOpen accessSenior author
  PublisherDOI

• Analysts' use of qualitative forward-looking earnings information

  SSRN Electronic Journal · 2024-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• Racial Diversity Exposure and Firm Responses Following the Murder of George Floyd

  SSRN Electronic Journal · 2023-01-01 · 19 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Racial Diversity Exposure and Firm Responses Following the Murder of George Floyd

  Journal of Accounting Research · 2023-04-13 · 43 citations

  articleOpen access1st authorCorresponding

  ABSTRACT George Floyd's murder caused many firms to reveal how exposed they are to racial diversity issues. We examine investor and firm behaviors after this socially significant event to provide evidence on the valuation effects of the exposure and ensuing corporate responses. We develop a text‐based measure of a firm's exposure to racial diversity issues from conference call transcripts and find that, after the murder of George Floyd, firms with diversity exposure experience a stock price decrease of approximately 0.7% around the date of the conference call. We provide evidence that this effect is attributable to race‐related exposure and not gender‐related exposure. Initiatives taken by firms mitigate the negative market reaction. We document that firms with racial diversity exposure respond by appointing Black directors. The stock market views appointments of Black directors more favorably after George Floyd's murder, except when they are perceived as symbolic. We also find that firms with greater exposure to racial diversity are more likely to establish diversity, equity, and inclusion (DEI) departments, appoint DEI leaders, specify diversity goals, increase supply chain diversity, and donate to racial justice causes. Our paper provides evidence that exposure to racial diversity issues adversely affects firm value, and companies address the exposure by taking actions.

  PublisherOA PDFDOI

• 2021 Excellence in Refereeing

  Journal of Accounting Research · 2022 · 1 citations

  1st authorCorresponding
  • Political Science
  • Business
  • Accounting
  DOI

• Joint Impact of Capital Regulation and Loan-Loss Reserving on Crisis Lending

  SSRN Electronic Journal · 2022-01-01

  articleOpen access1st authorCorresponding
  PublisherDOI

• Public Information and Capital Flows: Evidence from a Betting Market

  SSRN Electronic Journal · 2021-01-01

  articleOpen access1st authorCorresponding
  PublisherDOI

Frequent coauthors

• Alexander Ljungqvist

  Stockholm School of Economics

  18 shared

• Aytekin Ertan

  London Business School

  17 shared

• Peeyush Taori

  12 shared

• Lakshmanan Shivakumar

  9 shared

• Rahul Vashishtha

  8 shared

• Bryan T. Kelly

  Capital University

  8 shared

• Daniel Cohen

  Vanderbilt University

  8 shared

• Luo Zuo

  National University of Singapore

  7 shared

Awards & honors

• 2019 London Business School’s Excellence in Teaching Award
• Multiple awards for teaching from Rice students in 2021 and…