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.

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.

Declining worker bargaining power has been advanced as an explanation for dramatic generational changes in the U.S. macroeconomic environment such as the substantial decline in labor’s share of the national income, the loss of consumer purchasing power, and growing income and wealth inequality. In this paper, we investigate microeconomic implications by examining the effect of declining worker power on firm-level investment responses to a labor cost shock (mandated increases in the minimum wage). Over the past four decades, we find that investment-wage sensitivities go from negative to insignificant as management becomes less constrained and can pursue outside options. Consistent with drivers of weakening worker power, investment-wage sensitivity changes are more significant for firms that are more exposed to globalization, technological change, and declining unionization.

What determines the prevalence of family firms? In this project, we investigate the role of historical family culture in the spatial distribution of family firms. Using detailed firm-level data from China, we ffnd that there is a larger share of family firms in regions with a stronger historical family culture, as measured by genealogy density. The results are further conffrmed by an instrumental variable approach and the nearest neighbor matching method. Examining the mechanisms, we find that entrepreneurs in regions with a stronger historical family culture: i) tend to have family members engage more in firms; ii) are more likely to raise initial capital from family members; iii) are more willing to pass on the firms to their children. Historical family culture predicts better firm performance partly due to a lower leverage ratio.

We study how multinational companies may propagate Environmental, Social, and Governance (ESG) practices through subsidiaries in foreign countries with stricter ESG policies. Using staggered regulatory changes in a host country’s ESG strictness as an exogenous shock, we find that multinational firms with subsidiaries in countries that increased ESG strictness would significantly increase their R&D investments, build more green inventions in domestic operations, and have higher ESG ratings. Cities with more multinationals exposed to foreign ESG regulatory changes experience a greater reduction in air pollutant emissions. Our results are consistent with the argument that multinationals promote and propagate ESG practices across countries, likely to sustain access to finance in a foreign country with high ESG standards.

The U.S. stock market has long been the most popular venue for both foreign companies and global investors. The recent cross-border regulation tensions between the U.S. and China, however, have exposed many U.S.-listed China Concepts Stocks (CCS) to substantial de-listing risks, forcing them to pursue dual listings on the Hong Kong Stock Exchange (HKEX). In this paper, we quantify the economic value of dual-listing, using the SEC’s adoption of the ffnal amendments implementing mandates of the Holding Foreign Companies Accountable Act (HFCAA) on December 2, 2021 as a natural experiment. We estimate that CCS with pre-shock dual-listing status on average have 14.88% higher returns, or USD 8 billion in market capitalization, than their peers listed only on the U.S. exchanges during a three-month period after the shock. Our ffndings survive a set of robustness checks, including parallel trends test, alternative treatment and control groups based on the qualiffed but not yet dual-listed CCS, and various sub-sample and placebo analyses. In addition to stock returns, dual-listed CCS are also less adversely affected in trading volume, volatility, and liquidity. Our ffndings highlight the large economic impact of the escalating political U.S.-China tensions on the global ffnancial markets.

We propose a theory of corporate social responsibility (CSR) by linking it to a firm’s product market. In our model, the firm’s product exhibits network effects whereby its value increases with the number of consumers who purchase it. Moreover, with advancements in technology and big data, the firm can adopt personalized pricing for each consumer. We show that such a firm could use CSR as a commitment device for low product prices, which helps overcome the coordination problem among consumers and increases firm profits, thus supporting the notion of “doing well by doing good.”

Exploiting ffnancial news stories data, we construct news-implied linkages and document a strong lead-lag effect of ffrms with shared news coverage in China’s stockmarket. The news-link momentum strategy generates a monthly return of 1.33% and a four-factor alpha (Liu et al., 2019) of 1.43%. While prior evidence on the attention dynamics among ffrms with joint news coverage is limited, we show that the momentum spillover of news-linked ffrms is largely driven by investor underreaction. The return predictability from news links is also robust to controlling for alternative economic linkages. The ffndings suggest that information diffuses sluggishly among news-connected ffrms, thereby providing new evidence on the implication of media coverage for pricing efffciency.

Minority shareholder activism (MSA) on online interactive platforms is a new form of corporate governance in China. This paper investigates whether and how dividend-related MSA affects corporate dividend policies. We find listed firms are more likely to pay dividends and raise payout ratios with MSA. Our baseline findings are robust to a variety of robustness checks. We establish a causal relationship between MSA and future dividend payouts, with both instrumental variable approach and PSM-DID approach, and we provide evidence to show the increasing effect of MSA can be explained by exit threat and voting attendance. Our focused MSA complements the formal voting rights of minority shareholders and overcomes the absence of institutional investor monitoring. Overall, our findings suggest that minority shareholders can effectively monitor management when they are empowered with voice in the age of information.

党的二十大报告明确指出，推进健康中国建设，把保障人民健康放在优先发展的战略位置。本文基于2015年我国关于药品医疗器械审评审批制度的改革，探究医药领域制度改革对于医药创新的影响。本文的研究结果表明，药审改革大幅缩短了创新药的审评时长，显著提升了医药领域的创新质量，同时激励医药上市公司加大研发投入，增强创新药的研发，探索崭新的技术领域，并提升了公司的经营绩效。异质性分析表明，对于知识产权保护程度更高、市场化程度更高、市场中介组织发育和法律制度环境更完善的地区，以及融资约束更高的企业，药审改革提升医药创新质量的作用更为显著。本文的研究发现，对于我国医药产业由仿制为主转向自主创新为主以及国产创新药的崛起，具有重要的政策启示。