“How Are Institutions Informed? Proactive Trading, Information Flows, and Stock Selection Strategies”, 2020, Contemporary Accounting Research, forthcoming.
“Who is Afraid of BlackRock?”, 2020, Review of Financial Studies, forthcoming. (with M. Massa, INSEAD, and D. Schumacher, McGill University).
“Cross-Country Competitive Effects of Cross-Listings”, 2020, Review of Corporate Finance Studies: 9 (1), pages 116–164. (with S. Sarkissian, McGill University)
“The Product Market Impact of Minority Stake Acquisitions”, 2018, Management Science: 64(2), pages 825-844. (with A. Nain, University of Iowa)
“Can Short Sellers Detect Internal Control Material Weaknesses? Evidence from Section 404 of the Sarbanes-Oxley Act”, 2018, Journal of Accounting, Auditing and Finance. (with Z. Singer, HEC Montreal, and J. Zhang, University of Alabama Huntsville)
"The Bright Side of Financial Fragility", (with M. Massa, INSEAD, and D. Schumacher, McGill University) SSRN
Abstract: We highlight an important but overlooked characteristic of financial fragility: “fragile” stocks are more liquid because they are sensitive to non-fundamental liquidity shocks. This makes them less sensitive to corporate actions with price impact and therefore affects firms’ incentives to engage in those actions. We show that fragile firms have lower share repurchases but invest more, the effects stronger for financially constrained firms. We establish causality by relying on exogenous changes in fragility induced by mergers of asset managers with portfolio overlap in the stocks. Our results suggest that financial fragility has direct but unexpected real implications for corporate actions.
“Labor-Capital Substitution and Capital Structure: Evidence from Automation”, (with C. Wan, University of Massachusetts at Boston, and J. Qiu, McMaster University) SSRN
Abstract: This paper presents evidence that the exposure to automation technologies has a positive impact on a firm’s financial leverage. The effects are more pronounced in firms with greater labor costs, routine task intensity, firing costs, and union coverage. The results are robust when we instrument a firm’s exposure to automation technologies using the robotics adoption in European countries. Our analysis suggests that the exposure to automation technologies creates a replacement threat that weakens workers’ bargaining power, compressing their wage premiums for bearing financial distress risk and reducing wage rigidity, both of which allow firms to increase financial leverage.
“The Effect of Labor Cost on Innovation”, (with A. Nain, University of Iowa) SSRN
Abstract: We show that an increase in the cost of unskilled labor shifts the composition of corporate innovation toward automation technology. Using minimum wage increases as an exogenous shock to the cost of unskilled labor, we find a robust positive relation between the magnitude of the minimum wage change and post-shock increases in both the scientific value and economic value of automation patents. In some subsamples, we also find evidence of an increase in the share of automation patent applications in a firm’s patent portfolio. The impact of a minimum wage increase on labor-saving patents is driven by industries in which unskilled workers account for a large share of total wages costs and by industries reliant on routine tasks that are vulnerable to automation.
“Does Ownership Concentration Affect Corporate Bond Volatility? The Role of Illiquidity”, (with Y. Wang, University at Albany) SSRN
Abstract: This paper analyzes the relation between ownership concentration and corporate bond volatility. We show that increased ownership concentration is associated with higher volatility of corporate bonds. This relation is stronger among more illiquid bonds, during periods of heightened bond market illiquidity, and among the bonds held by corporate bond funds that invest in more illiquid assets and experience higher or correlated liquidity shocks. Using a sample of mutual fund mergers, we further show that increases in bond volatility are not driven by the endogenous ownership structure of bonds but rather the non-fundamental liquidity demand of large concentrated asset owners.
“Two Faces of Product Market Competition and Tax Avoidance”, (with R. Li, C. Wan, M. Wang, University of Massachusetts at Boston, and J. Qiu, McMaster University) SSRN
Abstract: This paper investigates the effect of product market competition on a firm’s tax avoidance behavior. We develop a theoretical model showing that a greater product market competition could increase the managerial incentive of tax avoidance due to a “threat-of-demotion” effect but decrease shareholders’ incentive of tax avoidance due to a “value-of-tax-saving” effect, resulting in a nonlinear impact of product market competition on tax avoidance. Empirically, we find consistent evidence that the effect of product market competition on a firm’s tax avoidance has an inverted U-Shape. Our analysis highlights that the product market competition could have a two-faced impact on a firm’s tax avoidance activities.
SSHRC Insight Grant, Social Sciences and Humanities Research Council, Principal Investigator, 2019 – 2022 (Amount: $88,219)
SSHRC Insight Development Grant, Social Sciences and Humanities Research Council, Principal Investigator, 2019 – 2021 (Amount: $48,268)
SSHRC Explore – Standard Research/Creative & Performing Arts Grant, McMaster University, 2017 (Amount: $7,000)