In this paper, we show that firms can become conservative in innovation when their directors face job insecurity. We find that after the staggered enactment of majority voting legislation that strengthens shareholders' power in director elections, firms produce fewer patents, particularly exploratory patents, and fewer forward citations. This effect is stronger for directors facing higher dismissal costs or threats and for firms with greater needs for board expertise and is mitigated by institutional investors' expertise in innovation. Overall, our results suggest that heightened job insecurity induces director myopia, which leads to a reduction in investment in risky, long-term innovation projects.

This paper studies how managers react to shareholder empowerment that makes votes on shareholder proposals regarding majority-voting in director elections binding. Exploiting staggered legislative changes that introduce such empowerment, we find that managers become more responsive to shareholder requirements by initiating majority voting through either management proposals or governance guidelines. Further results suggest compromised implementation: managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. 

We study how winning a significant industry award affects the behavior of finance professionals based on the Institutional Investor rankings of sell-side equity analysts. Employing a regression discontinuity design that compares the research outputs of third-place, all-star analysts and runner-up analysts who barely miss the distinction, we find that winning an award makes analysts more optimistic in their forecasts and recommendations and enables them to move the markets. Winning analysts obtain higher priority during earnings conference calls and have better career outcomes. The broader inference is that finance professionals who win a significant award may become more, rather than less, strategic.

Reelection pressure creates incentives to portray better performance to encourage the electorate to maintain the status quo. Using different U.S. states' staggered adoption of a legislative change that strengthens shareholders' power in director elections, we find more income-increasing earnings manipulation. We further document that these actions are more pronounced when directors face greater employment risk and when CEOs have stronger ties with board members. Finally, we find that after the legislative change, CEOs and CFOs receive higher short-term incentive pay and higher earnings-per-share performance targets. 

Using linked mutual-fund and consumption records for 180,000 investors on the world's largest mobile payment platform, we test whether investors consume more out of capital gains from funds that are more highly ranked in their online portfolios. Quasi-exogenous variation from a same-company grouping rule shows that mechanically elevating funds significantly increases next-month redemptions and spending. Effects are strongest at the top of the portfolio interface, for gains rather than losses, and among investors holding more funds. Finally, we show that fund-level attention effects aggregate to persistent portfolio-level consumption differences across investors with varying exposure to salient holdings.

This paper examines how complexity affects investment decisions of retail mutual fund investors. We develop a novel empirical approach to separate complexity's effect from beliefs and risk preferences. Using an RD design, we first identify a zero-crossing jump of 12.6% in purchase probability following a small asset price decline, which cannot be reconciled with Bayesian updating. We argue that decision complexity may lead investors to compress continuous price changes into coarse, sign-based categories. Indeed, we show that the discontinuity is stronger for larger consideration sets, less concentrated portfolios, uncertain environments, more complex funds, and less-educated investors. Controlled experiments produce discrete shifts in behavior similar to those observed in the field. Our findings have implications for the structure of retail demand for financial assets. 

Economic models of portfolio choice typically assume that investors evaluate all available assets. Using proprietary browsing and trading data from retail mutual fund investors, we directly observe investors’ actual consideration sets prior to trading. We show that investors consider only a small subset of available options, with consideration sets concentrated in salient and familiar assets. While investors appear to underperform relative to the full investment universe, they systematically select better-performing assets within the set they actually consider. A controlled online experiment that exogenously directs attention confirms that attention shapes consideration set formation and subsequent choices. Our results show that mismeasured opportunity sets lead to overstated investor biases and that attention constraints play a central role in in financial decision-making.

Utilizing positive quasi-random shocks to local housing prices in Shanghai, we show that stock investors who experienced significant returns from the real estate market traded less actively, took less risk, and spent less effort trading. We confirm the effect of housing price changes on investors' trading behavior in a national sample. Our findings suggest a substitution effect between the real estate and stock market and highlight the importance of understanding investors' trading behavior in light of intertemporal variations in other asset market. 

We identify a causal crowding-out effect of housing market investment on stock market participation. Using a large sample of individual stock trading data and exploiting China's policy on restricting households from purchasing houses, we find a significant increase in the stock market participation among affected households compared to others. Our results are driven by the substitution channel between the housing and stock market: (1) the treatment policy indeed reduces households’ investment in housing, (2) the treatment effect is more pronounced with stricter housing purchase restrictions and higher propensity for real property investment, and (3) households’ stock turnover rate decreases. 

When a better opportunity presents itself, whether and how would people grasp it? We answer this question by focusing on how parental investment responds to changes in their children's educational opportunities. We find that people in the disadvantaged area increased child-specific but not adult-specific spending after the improvement in educational opportunities. Importantly, the increase in education-related spending is greater among low-income parents, while this pattern is opposite for child-enrichment spending. A model in which parents respond to both opportunities and competition is consistent with the finding that parental investment does not decline in the previously-advantaged area.

This paper studies the impact of home ownership on consumption by exploiting housing lotteries in China that randomize participants’ eligibility to buy newly-built condos. Using bankcard transaction data, we find that in one year following a lottery, home ownership leads to a reduction in expenditures on non-durable goods and services and an increase in home-related durable goods consumption. We show substantial heterogeneity in total consumption and disaggregate consumption categories across homebuyers with varying lottery discounts, down payment sizes, and ownership of other properties. Overall, our findings imply a renovation effect, a pure wealth effect, and a liquidity constraint effect of home ownership on consumption. In particular, we find a higher marginal propensity to consume nondurable goods and services out of housing wealth among homebuyers without other properties or with higher debt burdens after home purchase. Finally, evidence suggests that repeat lottery participants are less financially constrained.