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Published papers:

  1. The Customer Knows Best: The Investment Value of Consumer Opinions,” forthcoming in the Journal of Financial Economics (2017). [Download] [Internet Appendix]
    - Featured in the Wall Street Journal, Oxford Business Law Blog, and HFM Week.
    Using a dataset of over 14.5 million customer product reviews on Amazon.com, I find evidence that consumer opinions contain information for stock pricing. Abnormal customer ratings positively predict subsequent stock returns as well as revenues and earnings surprises. These results suggest that consumer opinions contain novel information about firms fundamentals and stock pricing.
  2. Product Market Competition in a World of Cross-ownership: Evidence from Institutional Blockholdings,” with Jie (Jack) He, forthcoming in the Review of Financial Studies 30 (2017), 2674–2718. [Download]
    We examine whether and how institutional cross-ownership of same-industry firms affects product market behavior and performance. We find evidence suggesting that cross-ownership by institutional blockholders offers strategic benefits by fostering product market coordination. We establish causality by relying on a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers.
  3. Capitalizing on Capitol Hill: Informed Trading by Hedge Fund Managers,” with Meng Gao, Journal of Financial Economics 121 (2016), 521545. [Download] [Internet Appendix]
    We examine the hypothesis that hedge funds obtain an informational advantage in securities trading through their connections with lobbyists.  We find that connected hedge funds tend to trade more heavily in politically sensitive stocks, and they perform significantly better on politically sensitive positions than non-political positions..
  4. Institutional Investors and the Information Production Theory of Stock Splits,” with Thomas Chemmanur and Gang Hu, Journal of Financial and Quantitative Analysis 50 (2015), 413445. [Download]
    We use transaction-level institutional trading data to test an extended version of Brennan and Hughes’ (1991) information production theory of stock splits. We show that institutional brokerage commissions increase significantly after a split, thereby providing an incentive for brokerage houses to produce information about the splitting stock. We further show that brokerage houses produce more information and that institutional trading becomes more informative post-split.
  5. Gender and Corporate Finance: Are Male Executives Overconfident Relative to Female Executives?” with Darren Kisgen, Journal of Financial Economics 108 (2013), 822839. [Download]
    We study corporate financial and acquisition decisions made by female executives compared to male executives. We find evidence consistent with male executives being overconfident relative to female executives
  6. The Role of Institutional Investors in Initial Public Offerings,” with Thomas Chemmanur and Gang Hu, Review of Financial Studies 23 (2010), 44964540. [Download]
    We use a proprietory institutional trading dataset to examine the role of institutional investors in IPOs. We find that institutional investors possess a significant informational advantage in IPOs, are able to realize significant profits from their participation in IPOs, and play a supportive role in the IPO aftermarket.


Working papers:

  1. Internalizing Governance Externalities: The Role of Institutional Cross-ownership,” with Jie (Jack) He and Shan Zhao, June 2017. [Download]
    - Presented at the 2017 WFA (Whistler, BC, Canada) and the 2017 CICF (Hangzhou, China).
    - Featured in Columbia Law School Blue Sky Blog and Bloomberg View by Matt Levin.
    We study the role of institutional cross-ownership in internalizing corporate governance externalities using data on mutual fund proxy voting. Exploiting the variation in cross-ownership across institutions within a proposal as well as the variation in cross-ownership across firms within a given institution’s portfolio, we show that an institution’s holdings in peer firms increase the likelihood that the institution votes against management in shareholder-sponsored governance proposals.
  2. All the President’s Friends: Political Access and Firm Value,” with Jeffrey Brown, April 2017. [NBER Working Paper No. 23356]
    - Featured in The Economist, Wall Street Journal, Financial Times, NPR, Politico, Fortune, CNBC, Washington Examiner, The New Yorker, Harvard Business Review, and Bloomberg (1, 2).
    - Presented at the 2017 Political Economy of Finance conference (Stigler Center at Chicago Booth).
    Using novel data on White House visitors, we find that corporate executives’ meetings with key policymakers are associated with positive abnormal stock returns. We also find evidence suggesting that following meetings with federal government officials, firms receive more government contracts and are more likely to receive regulatory relief. The investment of these firms also becomes less affected by political uncertainty after the meetings.
  3. Informing the Market: The Effect of Modern Information Technologies on Information Production,” with Meng Gao, August 2017. [Download]
    - Presented at the 2017 CICF (Hangzhou, China) and the SEC.
    Using the staggered implementation of the EDGAR system in 1993-1996 as a shock to information dissemination technologies, we find evidence that internet dissemination of corporate information increases information production by corporate outsiders including individual investors and sell-side financial analysts.
  4. Pollution and Performance: Do Investors Make Worse Trades on Hazy Days?” with Nianhang Xu and Honghai Yu, June 2017. [Download]
    We explore the effect of air pollution on trading performance of stock investors. Using unique data on stock trades by 87,054 investors from 34 cities in China, we find a negative relation between air pollution and trade performance. The results highlight a hitherto unexplored cost associated with ambient air pollution, namely underperformance of stock market investors.
  5. Shareholder Coordination and the Market for Corporate Control,” September 2015. [Download]
    - Presented at the 2012 WFA (Las Vegas), the 2011 Financial Intermediation Research Society (FIRS) Annual Conference (Sydney, Australia), the 2011 China International Conference in Finance (CICF), and the CGIO Academic Conference (Singapore).
    I explore whether the ease of coordination, proxied using geographic proximity and social ties among institutional investors, enables institutions to play a more effective monitoring role in corporate control transactions. I find that target firms with greater ease of shareholder coordination experience significantly higher abnormal returns around the takeover announcement. In a similar vein, acquirer firms with greater ease of shareholder coordination are associated with higher acquisition announcement returns. These relations become significantly stronger after two regulatory shocks that reduce barriers to shareholder coordination.
  6. Dynamic Liquidity Preferences of Mutual Funds,” April 2013. [Download]
    - Presented at the 2009 AFA (San Francisco), 2008 EFA (Athens, Greece), and 2008 Singapore International Conference on Finance.
    Using datasets on mutual fund holdings and actual trades, I find evidence that mutual fund managers tilt their portfolios more heavily towards liquid assets, such as cash and liquid stocks, during times when expected market volatility is high. I further show that such dynamic behavior contributes to superior performance in mutual funds.
  7. Shareholder Coordination, Corporate Governance, and Firm Value,” October 2015. [Download]
    - Presented at the 2012 Rothschild Caesarea Center Annual Academic Conference (Herzliya, Israel) and the 2012 Financial Intermediation Research Society (FIRS) Annual Conference (Minneapolis), and the 2012 EFA (Copenhagen).
    I examine the impact of the ease of coordination among institutional shareholders on corporate governance and firm value. I find that the ease of coordination among institutional shareholders is positively associated with firm value. To establish causality, I use mergers of asset management firms and the 1992 proxy reform to identify exogenous shocks to shareholder coordination. I find evidence suggesting that the ease of coordination improves firm value by enhancing the governance role of institutional investors.