• 详情 State-owned Enterprises and Labor Unrest: Evidence from China
    Using an extensive panel of Chinese firms from the Annual Tax Survey and relying on labor unrest as shock to local social stability, we show that state-owned enterprises (SOEs) react to nearby labor unrest by creating additional employment at the expense of firm performance. Each SOE exposed to unrest hires 3% more employees, which is a sizeable aggregated effect. This effect is larger when labor unrest occurs in the same industry as the exposed SOEs, when local governments have sound fiscal budgets, and when governing mayors have stronger promotion incentives. SOEs obtain more fiscal benefits when they absorb additional labor. In contrast, non-SOEs do not react to labor unrest, and their performance is unaffected. Similar effects are detected when we use the population of Chinese listed firms. This paper provides evidence that SOEs internalize the goal of maintaining social stability and contribute to the growth of the non-state sector.
  • 详情 The Economics of Mutual Fund Marketing
    We uncover a signiffcant relationship between the persistence of marketing and investment skills among U.S. mutual fund companies. Using regulatory filings, we calculate the share of marketing-oriented employees to total employment and reveal alarge heterogeneity in its level and persistence. A framework based on costly signaling and learning helps explain the observed marketing decision. The model features a separating equilibrium in which fund companies’ optimal marketing employment share responds to their past performance differently, conditional on the skill level. We confirm the model prediction that the volatility of the marketing employment share negatively predicts the fund companies’ long-term performance.
  • 详情 Investments and Innovation with Non-Rival Inputs: Evidence from Chinese Artificial Intelligence Startups
    Large technology firms have substantial advantages in data, a key non-rival input for developing AI technology. We argue that investments by large technology firms stimulate innovation by AI startups through the sharing of data, bringing more than money to the startups. We assemble a unique dataset containing (nearly) the universe of AI-inventing firms in China to examine the innovation effects of these investments. Our difference-in-differences estimation shows that, after receiving investments from large technology firms, AI startups increase the number of AI patent applications by 62% and the number of software products by 56%, relative to their mean values prior to the investments. Using a triple-differences strategy, we further find that the innovation impact of investments by large technology firms is stronger than that of investments by other firms without data advantages. We confirm these findings using an instrumental variables approach based on recent investments by large technology firms in peer startups. Finally, we provide novel evidence that the innovation effect works mainly through sharing non-rival data by leveraging our rich information on non-AI data-related patent applications and data-related online job postings.
  • 详情 The Employment Consequences of Earnings Management: Evidence from Audit Firm Mergers in China
    We investigate the employment consequences of earnings management. Using audit firm consolidation as an exogenous shock impacting earnings management, we find a positive casual effect of firm-level earnings management on employment growth. The effect is concentrated in privately owned enterprises and firms with higher operational risk, consistent with earnings management affecting labor dynamics by influencing employees’ perceptions of job security and subsequent career decisions. We further document a crowding out effect in local labor market, where a firm’s earnings management negatively influences the employment growth of local peer firms.
  • 详情 Beyond Performance: The Financial Education Role of Robo-Advising
    Using unique data on Alipay users' investment accounts, we find that, in addition to generating better performance than investors’ self-directed portfolios, robo-advising has a positive spillover effect on its adopters in terms that it improves their investment behaviors. Investors have more diversified portfolios and exhibit fewer behavioral biases in portfolio management and fund choices in their self-directed accounts after adopting robo-advising. The spillover effect is more prominent for adopters who interact with the service more actively and who were less sophisticated before adopting the app. We also find that adopters learn from the robo-advisor by simply imitating its portfolios or strategies. Collectively, this study provides large-sample, non-laboratory evidence that robo-advising effectively plays a role in educating investors through repeated interactions with its adopters and setting investment models that are easy to follow.
  • 详情 Employment Effect of Mandatory CSR Disclosure: Evidence from China
    Using staggered exogenous shocks to mandatory CSR disclosure, we examine the effect of mandatory CSR disclosure on employment growth. We find that CSR reporting firms have a higher employment growth following the mandate than non-CSR reporting firms. With respect to potential channels, we document that mandatory CSR disclosure promotes employment growth by improving firms’ CSR performance on employee welfare. In cross-sectional tests, we find that the employment effect is more pronounced for state-owned enterprises, firms in hazardous industries and firms in high-tech industries. We also find that cities most impacted by the mandate exhibit higher aggregate employment growth. While mandatory CSR disclosure promotes employment growth of mandated firms, it has a crowding out effect on employment growth of non-mandated local peer firms. Our paper offers novel evidence on the impact of mandatory CSR disclosure on labor resource allocation.
  • 详情 Measuring Monetary Policy under the Evolution of Monetary Policy Framework in China
    This paper employs Autoregressive Distributed Lag (ARDL) models and monetary base growth to construct an exogenous and comprehensive monetary policy measure in China, where various monetary policy instruments co-exist, and the operational and intermediate targets are changing over time. Our methodology relies on the market equilibrium relationship instead of ad hoc policy rules and strict identiffcation assumptions, hence is robust to monetary policy frameworks in any economy. The empirical results show that the active monetary base growth (AMBG ) constructed via the ARDL models is an excellent description of the behavior of People’s Banks of China across time, and generates impacts on macro variables consistent with implications of macro theory when used in VAR analyses.
  • 详情 TURBULENT BUSINESS CYCLES
    Recessions are associated with sharp increases in turbulence that reshuffle firms’productivity rankings. To study the business cycle implications of turbulence shocks, we use Compustat data to construct a measure of turbulence based on the (inverse of) Spearman correlations of firms' productivity rankings between adjacent years. We document evidence that turbulence rises in recessions, reallocating labor and capital from high- to low-productivity firms and reducing aggregate TFP and the stock market value of firms. A real business cycle model with heterogeneous ffrms and ffnancial frictions can generate the observed macroeconomic and reallocation effects of turbulence. In the model, increased turbulence makes high-productivity ffrms less likely to remain productive, reducing their expected equity values and tightening their borrowing constraints relative to low-productivity firms. This leads to a reallocation that reduces aggregate TFP. Unlike uncertainty, turbulence changes both the conditional mean and the conditional variance of the firm productivity distribution, enabling a turbulence shock to generate a recession with synchronized declines in aggregate activities.
  • 详情 Stakes and Investor Behaviors
    We examine how stakes affect investor behaviors. In our unique setting, the same investors trade stocks in real accounts using their own money and, at the same time, trade in a simulated setting. Our real-world within-investor estimation produces strong evidence that investors exhibit stronger biases and perform worse in their higher-stakes real accounts than in their lower-stakes simulated accounts. Even with no monetary stakes, investors exhibit strong biases in their simulated accounts, and biases in the two types of accounts are strongly positively correlated. Such behavioral consistency suggests that low-stakes experimental methods, although imperfect, can be informative about real-world human behaviors. Using account data from two brokerage companies, we find that investors exhibit a stronger disposition effect on positions with greater portfolio weight. Hence, the finding that stakes-strengthening-biases may not be unique to the comparison between no-monetary and high-monetary stakes.
  • 详情 Cloud Infrastructure, Industry Dynamics and Competition: Evidence from China
    We examine the rise of cloud computing in China and its impact on industry dynamics. We find that industries which depend more on cloud infrastructure experience a higher increase in firm entry and exit after cloud computing expands in China. The positive relation with firm exit is driven by the increased exit through business failure and adjustments as well as the increase in the exit of less productive incumbents. Despite the large numbers of firms that exit, the number of firms increases as entryaccelerates and the competition increases in industries with more exposure to cloud infrastructure. The average age of firms also becomes younger in industries with more exposure to cloud infrastructure. Finally, we show that equity financing increases for industries impacted by cloud computing and the positive impact is more pronounced for younger firms. These findings point to increased competition and increased industry churn through the technological effects of cloud computing.