Dr. Svetlana Petrova is an Assistant Professor of Finance at the University of New Hampshire, Peter T. Paul College of Business and Economics. She received her Ph.D. in Finance from the University of Florida, Warrington College of Business, and her Ph.D. in Economics from the Middle Tennessee State University, Jennings A. Jones College of Business. Dr. Petrova conducts research on topics such as fintech, investments, behavioral finance, and the labor effects in corporate finance. Curriculum Vitae Contact: Department of Accounting and Finance Peter T. Paul College of Business and Economics, University of New Hampshire, 10 Garrison Ave, Durham, NH, 03824 Office 370C E-mail: svetlana.petrova@unh.edu |
Research Interests
Cybersecurity in Finance, FinTech, Investments, Behavioral Finance
Academic Research - Working Papers
Trading Ahead of the Disclosure: Cybersecurity Breaches (with Andy Naranjo)
- Featured in Institutional Investor on January 4th, 2021 link
- Presented: 8th Annual OptionsMetrics Research Conference, October 2019, UF Finance Seminar Series, Brown Bag Seminar, October 2019; NBEA Annual Meeting, November 2020 (Best Paper Award)
- Abstract: Using firm-level options trading activity from OptionMetrics, we investigate informed trading activity in equity options prior to a firm’s cybersecurity breach disclosures. For the breached companies, we document pervasive directional options activity, consistent with strategies that yield abnormal returns to investors with private information. This informed trading activity is manifested in positive abnormal trading volumes, excess implied volatility, and higher bid-ask spreads prior to cybersecurity breach announcements. Interestingly, the higher abnormal option trading volumes are significantly related to the firm’s negative buy and hold abnormal equity returns after the official breach disclosure. These effects are stronger for deep-out-of-the-money (DOTM) put options, which typically have the highest abnormal announcement returns. Consistent with informed trading activity, we further document an average rise in percentage bid-ask spreads prior to the breach announcements and also provide evidence that there is unusual trading activity in informed volatility strategies. We show that the more informed trading is significantly associated with higher liquidity and with breached firms that have lower quality internal controls. Finally, to better understand the potential sources of the informed trading activity, we examine Securities and Exchange Commission (SEC) insider trading reports ahead of the data breach disclosures. We find that the trading activity of these insiders often runs counter to our documented unusual option trading activity, providing evidence that these designated insiders avoid trading on the internal breach information.
Cybersecurity Breaches, Firm Disclosures, and Stock Market Responses (with Andy Naranjo)
- Presented: FMA Annual Meeting, October 2019; SFA Annual Meeting, November 2019; EFA Annual Meeting, April 2019; Florida Finance Conference, October 2018, under review at RFS
- Abstract: This paper examines firm disclosure behavior and stock market responses to cybersecurity breaches. Although cybersecurity breaches occur frequently and are costly, no unified requirement regarding firm breach information disclosures exists. A combination of this legal and regulatory lacuna as well as un- certainty when a firm discovers a breach, create firm incentives to choose when to report and what information to report to decrease potentially negative breach consequences. We provide a basic, game theoretic model of a firm’s decision to disclose a breach, and we show that firms choose what, when, and how to disclose to diminish the negative effects from a breach. Consistent with the conjectures from our model, we provide comprehensive evidence showing that firms choose how to disclose cyberbreach infor- mation to decrease firm risks and costs. We also find that more severe breaches are likely to get detailed disclosures, and firms that tend to be more transparent are likely to remain transparent in disclosing security breaches. Examining the stock market’s reaction to cybersecurity breaches, we find that the market reacts more negatively to breaches with a larger number of records and to intentional breaches. In cases where the breach size is undisclosed, we find that the market reacts more negatively to breaches where customer data were revealed. We also find that firms with positive stock price momentum before the breach disclosure experience larger negative breach abnormal returns. Our results suggest the need for several regulatory changes to fill the current law lacuna and reduce firm opportunities to manipulate breach disclosures.
Are US Public Pension Funds Overpaying for the CIOs' service?
- Presented: EFA Annual Meeting, April 2017; MFA Annual Meeting, March 2016.
- Abstract: This study analyzes the impact of the Chief Investment Officer’s (CIO) pedigree on the performance of U.S. public pension funds in a number of different ways. First, I analyze the connection between the CIOs’ background and investment income; then, I attempt to identify the risk taking behavior and risk tolerance associated with certain CIO characteristics; finally, I estimate the impact of the CIO’s tenure on the fund’s success. This study draws on the proprietary CIO characteristics data combined with the Center for Retirement Research (CRR) database and the information from individual fund CAFRs. I find that, on average, the CIO’s background has relatively little impact on investment returns, but it is a significant determinant of risk taking behavior. Tenure, gender and age are the most significant drivers of total returns and positive tracking error, while education and gender are the biggest determinants of the risk tolerance. Overall, the CIO’s background explains only about 1% of the variation in total returns of US Public Pension plans. However, the pedigree explains approximately 20% of the CIO’s stock picking talent. Educational background and gender are the chief determinants of a CIOs’ risk taking behavior. CFA charter holders demonstrate higher flexibility and better tolerance to modern risks, while MBA and Law degree holders act more conservatively. Female CIOs prefer to stay with the classical investment choices and have low risk tolerance towards modern investment instruments. Finally, no significant change in public pension fund operations or returns appears to be associated with a change in CIOs. On average, excess returns decrease during the first two years on the job and increase starting the third year. Returns also tend to increase once a CIO obtains a personal interest in the fund’s performance through vesting. These results hold over a wide variety of specifications.
Work in Progress
Cybersecurity Breaches, High Frequency Trading, and Digital Price Manipulation
Cybersecurity as a good
Cybersecurity as a good
Awards, Grants, and Honors
- NBEA Annual Meeting Best Paper Award, 2020
- Beta Gamma Sigma Honor Society
- American Finance Association Doctoral Student Travel Grant, 2019
- University of Florida Full Doctoral Fellowship, 2016-2019
- American Real Estate Society Doctoral Student Grant, 2016
- SESUG Graduate Student Grant, 2015
- Doctoral Teaching Certificate Program Fellowship, 2015
- Middle Tennessee State University Full Doctoral Fellowship, 2016-2016
- The Finance University under the Government of Russia Honors Scholarship, 2002-2007
- Graduated High School Summa Cum Laude
Teaching Experience
- International Finance
2017 - 2020
Teaching Assistant to Andy Naranjo
- Debt and Money Markets
Instructor Rating (Median): 4.00/5.0 (University Median: 4.0/5.0)
- Personal Financial Planning
Instructor Rating (Median): 4.0/5.0 (University Median: 4.0/5.0)
- Business Analytics in R Workshop Series for the GatorTech Club
- International Financial Reporting Standards (ACCA)
Industry and government EXPERIENCE
- Investments Research Economist (Intern), Tennessee Consolidated Retirement System
Assisted the fixed income (more than $13.5 billion under management) and equity (more than $25 billion under
management) portfolio management groups by providing daily forecasts and developing automated AI based
forecasting and reporting tools using Bloomberg, Python and R.
- Director, Strategic Development
Developed and implemented business development strategies, including international and cross-industry expansion.
Directly managed a group of more than 30 employees.
- Research Assistant/Associate
Actively participated in international and forensic audit and consulting projects, based on IFRS, US GAAP, and SEC
Regulations compliance. Part of the transactions support team.
certifications
- SAS Certified Statistical Business Analyst
- FinTech Law and Policy