We examine intensive traders, those who contribute the most to daily volume, and provide new evidence of informational advantages. Using unique Chinese data on particularly active market participants, we demonstrate that intensive trading predicts returns, especially around value-relevant announcements. We also identify several plausible channels; these effects are pronounced for intensive traders who share a geographic location with the firms in which they trade and for stocks with low analyst coverage or small capitalizations. We also uncover novel advantages for intensive traders located near relevant corporate counterparties. Finally, our results suggest a likely important role for lower information acquisition costs.

This study investigates the role of contextual cues in memory-based decision-making within high-stakes trading environments. Using trade records from a large Chinese brokerage firm, I show that an everyday contextual cue—geographic location—triggers the recall of previously traded stocks: when an investor returns to a city she has visited before, her probability of retrading stocks associated with that city rises by 2.1 percentage points under the most saturated specification (up to 12.2 percentage points under less saturated ones). The effect displays the signatures of similarity-based recall: it is diluted by intervening trading experiences, decays with the age of the memory trace, survives when the city is not the investor's home, is not explained by mechanical recency, and is present for orders submitted via both smartphones and PCs. I then examine an extreme-event cue, COVID-19 quarantine, and find a smaller and less robust effect; the interference and decay signatures are absent precisely for these strongly encoded traces, as the memory account predicts. Memory-cued transactions underperform: stocks bought upon the cue earn about 50 basis points less per week than stocks bought for other reasons on the same day. The study provides causal field evidence for memory-based theories, particularly similarity-based recall, in real-world trading.

This paper provides a first systematic analysis of urban vibrancy in human capital supply in explaining persistent geographic firm valuation dispersion in China. We find persistent, significant city-to-city differences in Tobin’s q, especially among large, mature, or high labor-intensive firms. To explain such geographic differences in firm valuations, we identify several factors of the endowed city competitive advantages in creating human capital that play important roles in explaining the persistent geographic firm valuation premia. Our evidence suggests that city geographic location and initial cumulated human capital supply have created long-lasting, and growing, shareholder wealth by attracting and retaining talents and human resources in local firms.

We examine the information content of changes in shareholdings after private issuance of public equity (PIPE) by mutual funds that participate in PIPEs in China. The results show that the changes in shareholdings is positively related to alpha and cumulative abnormal return (CAR) for PIPE issuers with high information asymmetry, suggesting that the participating mutual funds have superior information. These results are robust after controlling for investment skill, geographic location, and alumni relation. The positive relation between shareholding change and information content is driven by PIPE issuers with weaker corporate governance. In addition, the positive relation is stronger when the placement discount is lower. These results are consistent with a hypothesis that controlling shareholders/management in Chinese PIPE firms may collude with mutual funds to do tunneling.

This paper examines the causes and consequences of venture capital (VC) stage financing. Using information about the geographic location of an entrepreneurial firm and the distance between the VC investor and the firm, I distinguish between three different hypotheses: the monitoring hypothesis, which argues that the VC staging and monitoring of entrepreneurial firms are substitutes; the hold-up hypothesis, which argues that staging is a mechanism for mitigating the hold-up problem between the entrepreneur and the VC investor; and the learning hypothesis, which argues that staging creates value through the real options generated by learning by VC investors. My analysis of the causes of stage financing suggests that VC investors located farther away from an entrepreneurial firm tend to finance the firm using a larger number of financing rounds, shorter durations between successive rounds, and investing a smaller amount in each round; however, VC investors’ propensity to stage is independent of whether or not the firm is located in a close-knit community. My analysis of the consequences of stage financing suggests that VC staging positively affects the entrepreneurial firm’s propensity to have a successful exit, operating performance in the IPO year, and post-IPO survival rate, but only if the firm is located far away from the VC investor; however, the entrepreneurial firm’s performance is independent of whether or not it is located in a close-knit community. Overall, the evidence supports the monitoring hypothesis, but does not provide any support for the hold-up or learning hypotheses.