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.

This paper studies how changes in the salience of investments affect consumption out of capital gains. We leverage granular, account-level data from 200,000 active investors on a leading mobile payment platform. The platform connects mutual fund investments with investors’ expenditure records. We find that investments that are made more salient elicit a greater consumption response, exploiting two quasi-experiments that introduce exogenous variation in the displayed ranking of funds. First, the platform defaults to displaying the most recently acquired fund at the top of the holdings page, grouping it with older funds from the same company. We find that investors’ consumption response is stronger to capital gains from funds of the same companies as their recent purchases. Second, after a display setting change which allowed sorting by performance, the consumption response to top-performing funds becomes more pronounced compared to lower-performing ones

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.