1. Quasi-Indexer Ownership and Insider Trading: Evidence from Russell Index Reconstitutions (with Stephen Hillegeist)

Contemporary Accounting Research, 2021

Abstract: The prior literature on the association between institutional ownership and insider trading has produced a mixed set of results. These results are difficult to interpret because the association between them is likely endogenous and prior studies have not employed effective identification strategies to address this issue. In this study, we examine the effects of quasi-indexer institutional ownership on insider trading using the plausibly exogenous discontinuity in quasi-indexer ownership around the Russell 1000/2000 index cutoff. Using both regression discontinuity and instrumental variable research designs, we find higher quasi-indexer ownership leads to less insider trading (both buys and sells) and less profitable sell trades. The effects for sells are concentrated among insider trades that, ex ante, are more likely to be based on private information. Our evidence on the profitability of buys is mixed. In addition, we find firms with higher quasi-indexer ownership are more likely to have and/or more strictly enforce blackout policies.


  • Arizona State University/University of Arizona 2017 Joint Accounting Conference

  • University of Technology Sydney 2017 Summer Accounting Conference

  • University of Tasmania (2017)

  • Arizona State University (2016)

  • University of Auckland (2016)

  • University of Western Australia (2016)

Media Coverage: Columbia Law School’s Blog on Corporations and the Capital Markets

Working Papers

1. Institutional Dual-Holders and Corporate Disclosures: A Natural Experiment (with Lin Cheng, Qiang Cheng, and Mark Yan)

Revise and resubmit at Contemporary Accounting Research

Abstract: This study examines the influence of institutional dual-holders, whose portfolios hold both loans and equity securities of the same firms, on those firms’ disclosures. Using mergers between institutional shareholders and lenders to the same firms as exogenous shocks to identify firms with institutional dual-holders, we document that such firms are less likely to provide management forecasts and disclose fewer voluntary 8-K items. In cross-sectional analyses, we find that these effects are more pronounced when institutional dual-holders have higher ownership and thus greater ability to influence firms’ disclosures and when firms have lower litigation risk. Additional analyses indicate that the influence of institutional dual-holders on corporate disclosures is driven by both their trading and monitoring incentives. Lastly, we find that firms with institutional dual-holders also provide more private disclosures to their dual-holders via loan contract covenants.


  • AAA FARS Midyear Meeting (2020)

  • AAA Annual Meeting (2020)

  • AAA Western Region Meeting (2020, Doctoral Student-Faculty Interchange session)

  • University of Arizona (2019)

  • National University of Singapore (2019)

  • Singapore Management University (2019)

  • The University of Hong Kong (2019)

  • China Europe International Business School (2019)

  • Tsinghua University (2019)

  • Peking University (2019)

2. Mutual Fund Liquidity Management, Stock Liquidity, and Corporate Disclosure

Under review

Based on my Accounting PhD Dissertation at Arizona State University; Dissertation Committee Members: Stephen Hillegeist (co-chair), Shawn Huang (co-chair), and Yinghua Li.

Abstract: This study presents the first evidence that mutual fund liquidity management affects both stock liquidity and information disclosure of portfolio firms. Using a difference-in-differences approach that exploits an SEC proposal as an exogenous shock to mutual fund liquidity management, I find causal evidence that mutual fund liquidity management improves liquidity of underlying stocks. The liquidity improvement is more pronounced when mutual funds have stronger incentives to improve portfolio liquidity and more resources to influence firms, and when portfolio firms have lower stock liquidity and higher information asymmetry prior to the SEC proposal. I further show that mutual funds may exert pressure on portfolio firms to improve their disclosure as a channel to improve stock liquidity. Overall, the results indicate that liquidity management at the fund level has important implications for stock liquidity and information disclosure of portfolio firms.


  • AAA Spark Meeting (2021)

  • Hong Kong Junior Accounting Faculty Conference (2021)

  • AAA Annual Meeting (2020)

  • Hong Kong Polytechnic University (2020)

  • Chinese University of Hong Kong (2020)

  • Hong Kong Baptist University (2020)

  • National University of Singapore (2020)

  • Singapore Management University (2020)

  • University of Hong Kong (2020)

  • Arizona State University (2019)

  • Accounting PhD Rookie Recruiting and Research Camp (2019)

Media Coverage: Duke Law School’s Blog

3. Career Experience and Executive Performance: Evidence from Former Equity Research Analysts (with Shawn Huang, Artur Hugon, and Summer Liu)

Abstract: This study examines the portability of skillsets to the top executive position. In particular, we examine CEOs and CFOs who have experience as equity research analysts, finding these executives generate earnings guidance that is more accurate than that of other executives, and make M&A transactions with significantly higher announcement returns. For available executives, we examine their work histories as research analysts, finding stronger results for those who were more accurate forecasters, better stock pickers, more experienced, and those with smaller gaps between their analyst and executive jobs. Beyond these outcomes, we find these executives provide clearer answers to analysts during conference calls, especially when answering forward-looking and quantitative questions. Overall, our evidence suggests that specific skills gained in executives’ formative years significantly impact corporate performance outcomes.


Media Coverage: Duke Law School’s Blog

4. Mutual Fund Strategic Disclosure (with Vikas Agarwal and Shawn Huang)

Abstract: This study documents novel evidence that mutual funds act deliberately to meet the statutory holding thresholds of beneficial ownership disclosure, Schedule 13D/G filings. Further analysis reveals that 13D/G filings help mutual funds raise the demand for the underlying stocks, resulting in higher stock prices and liquidity. We also find that mutual funds engaging in strategic disclosure are much larger and more active in trading than funds not engaging in strategic disclosure. Additional tests suggest that portfolio firms involved in strategic disclosure are smaller and less liquid and have less analyst coverage than other portfolio firms around the holding thresholds, highlighting the incentive of mutual funds to use strategic disclosure to improve the demand for these stocks. Finally, we show that investors who follow mutual funds and invest in companies involved in strategic disclosure may suffer losses in the long run.


  • AAA Annual Meeting (2021, scheduled)

  • Hong Kong Polytechnic University (2020)

  • AAA FARS Midyear Meeting (2020)

  • Arizona State University/University of Arizona 2018 Joint Accounting Conference

  • Texas Tech University (2018)

  • 2018 AAA/Deloitte Foundation/J. Michael Cook Doctoral Consortium

  • Arizona State University (2017)

5. Investor Time Preference and Corporate Production of Short-Term Information (with Sean Cao, Shawn Huang, and Yinghua Li)

Abstract: Using the 2004 SEC reform of mutual funds’ portfolio disclosure frequency, we examine how an exogenous shock to investor horizon induces investee firms to adjust production of short-term information. We find that firms with larger mutual fund ownerships exhibit greater increases in the frequency of short-horizon management forecasts after the reform. The increase in short-term management forecasts is more strongly linked to mutual fund ownership when fund managers have greater career concerns, and when they devote more attention to the stock. Results are also stronger when corporate executives are more likely to capitulate to mutual fund influence, when there is a weak presence of dedicated institutional investors, and when boards are comprised of fewer independent directors. In addition, we observe a positive link between mutual fund ownership and a deterioration in management guidance quality. These results provide new evidence on how institutional investors’ time preferences drive firms’ guidance policies.


  • The University of Hong Kong (2019)

  • Shanghai University of Finance and Economics (2019)

6. Quasi-Indexer Ownership and Conditional Conservatism: Evidence from Russell Index Reconstitutions (with Stephen Hillegeist and Fernando Penalva)

Abstract: We examine the effects of quasi-indexer ownership on conditional conservatism using the plausibly exogenous discontinuity in quasi-indexer ownership around the Russell 1000/2000 index cutoff. Using both regression discontinuity and instrumental variable research designs, we find higher quasi-indexer ownership leads to higher levels of conditional conservatism. We also find the magnitude of this conservatism effect is larger when the expected benefits of conservatism are greater and in the presence of activist shareholders. Importantly, we examine the mechanisms through which the conservatism effect occurs. We find the conservatism effect is completely explained by the influence quasi-indexer ownership has on CEOs’ equity-based incentives. Differences in quasi-indexer ownership around the threshold cause changes in CEO incentives, which in turn result in the firm choosing more conservative accounting policies. Our evidence provides new insights into the role of quasi-indexers as external monitors and to what extent they directly or indirectly influence firm policies.


  • 2019 European Accounting Association Annual Congress

  • City University of Hong Kong (2018)

  • 2018 AAA Annual Meeting

7. Managerial Incentives and Risk Taking: Evidence from Hedge Fund Leverage (with Jay Wang and Yi Xiao)

Abstract: Using novel leverage and managerial ownership measures derived from public filings, this paper examines the role of managerial incentives in the use of leverage, in the context of hedge fund industry. We find a positive and convex relationship between fund leverage and the option-like compensation incentives, with the leverage level being significantly higher as the fund's asset under management (AUM) nears its high-water mark (HWM). We also find that hedge funds significantly reduce the leverage, when the incentive fee options are deep out of the money. Further, greater managerial ownership is associated with higher leverage, conditional on the incentive fee option being near the money. The findings lend support to option-like compensation contracts and managerial ownership improving incentive alignment between fund managers and investors. Interestingly, we find that investor flows and fund performance have an overall positive reaction to increases in leverage, which is mainly driven by well-performing funds with fund values sufficiently close to the HWMs.


  • University of Washington

  • University of Oregon

  • Financial Management Association Annual Meeting (2018)

  • China International Conference in Finance (2018)