DuckKi Cho

Lecturer (Assistant Professor) of Finance

The University of Sydney Business School

Research Interests

Corporate Finance, Capital Market, Labor Economics, Networks, Household Finance

Curriculum Vitae     SSRN

Google Scholar Profile

Contact Information

Rm 421, Codrington Building H69
The University of Sydney, NSW, 2006, Australia

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Journal of Financial and Quantitative Analysis, 2023, 58(1), 29-70 (Online Appendix)

Best Paper Award in Behavioral Finance at the 2016 MFA Annual Meeting 

Using data from the National Longitudinal Survey of Youth 1979, we find that households who were adversely affected by natural disasters are less likely to participate in risky asset markets. After a disaster shock, households become more risk-averse and lower their expectations of future stock market returns. Our evidence suggests that transient but salient experiences can be an important factor in explaining the limited stock market participation puzzle.

Working Papers

Revision Requested by The Journal of Law and Economics

Best Doctoral Paper Award in Corporate Finance at the 2017 SWFA Annual Meeting
Semi-finalist for Best Paper Award in Corporate Finance at the 2017 FMA Annual Meeting

Presentations: 2016 FMA Doctoral Student Consortium, 2017 SWFA, 2017 MFA, 2017 FMA Asia/Pacific, 2017 USC Marshall Ph.D. Conference, 2017 CICF, 2017 EFA, 2017 FIRN, 2017 FMA, 2017 Wellington Finance Summit, 2018 AsianFA, 2018 FDU, Arizona State University, Mississippi State University, Nanyang Technological University, Hong Kong Polytechnic University, City University of Hong Kong (Finance, Accounting), University of Sydney, Australian National University, Chinese University of Hong Kong, Hong Kong Baptist University, Peking University HSBC Business School

Firms reduce investment when facing downward wage rigidity (DWR). I construct DWR measures and exploit staggered state-level changes in minimum wage laws as an exogenous variation in DWR to document this fact. Following a one-standard-deviation increase in the minimum wage, firms reduce investment rates by 2.68 percentage points. The investment cut cannot be explained by labor adjustment under capital-labor complementarities. I identify aggravation of debt overhang and increased operating leverage as mechanisms by which DWR impedes investment. Finally, DWR enhances value and production efficiency when firms are subject to other frictions causing overinvestment, consistent with the theory of second best.

Revision Requested by  Management Science

General Research Fund from the Research Grants Council of Hong Kong (Project No. 21502018)

Presentations: 2020 UA-ASU Junior Finance Conference, 2020 NFA, WAPFIN@STERN 2020, 2nd Finance Junior Conference at Indiana University, 2020 Boca Corporate Finance and Governance Conference, 2020 AFBC, 2021 MFA, 2021 SOLE, 3rd Future of Financial Information Conference, 2021 FIRS, 2021 KIF-KAEA-KAFA, 2021 CICF, 2021 CAFM, 2022 HARC, 2022 ACDE, 2022 FMA Napa/Sonoma Conference, 2022 FMCG, 2022 SSES, 2022 Business Identity and Networks (BINS) Conference, 2022 AAA, 2023 AFA, Arizona State University, Nanyang Technological University, Peking University HSBC Business School, Sungkyunkwan University, Bilkent University, Toulouse School of Economics, Syracuse University, KAIST, University of Sydney

We show that the social capital embedded in employees’ networks contributes to firm value and provide evidence on the mechanisms. Using novel, individual-level network data, we measure a firm’s social capital derived from employees’ connections with external stakeholders. The directed nature of connections allows for identifying whether one party in a connection is a more valued contact. Results show that firms with more employee social capital perform better; the positive effect stems primarily from employees being valued by others. We provide causal evidence exploiting the enactment of a government regulation that imparted a negative shock to networking with specific sectors.

Revision Requested by  The Accounting Review

Media:  The FinReg Blog by Duke Financial Economics Center
Presentations: 2022 CAFM, 2023 HARC, 2023 SARAC, 2023 XJTLU AI and Big Data in Accounting and Finance Research Conference, 2023 KAA, 2023 SSES, 2023 MIT Asia Conference in Accounting, 2023 AAA, 2023 EEA, 2023 SBFC, 2024 AFA, 2024 KFA-TFA Joint Conference, 2024 FMA Asia/Pacific, KU-KAIST Accounting Seminar Series, City University of Hong Kong, Arizona State University, Peking University HSBC Business School, Sogang University
†(withdrawn due to COVID travel restriction or other reasons)

This paper investigates whether employees in conjunction with their professional networks function as information intermediaries. Collectively, employees have access to value-relevant information that can be distributed through both their direct professional contacts and the contacts of their contacts. We find that firms with more highly connected employees have lower market reactions around earnings announcements. The transmitted information appears to be positive and firm-specific rather than negative and macroeconomic or industry-wide. We provide causal evidence using mergers of brokerage houses as a source of exogenous variation in the information environment. In addition, stock prices incorporate earnings-related information on a more-timely basis when employees are more connected: a smaller post earnings announcement drift and a greater intra-period timeliness metric before and around the earnings announcement. Overall, our findings suggest that employees and their professional connections play an important role as information intermediaries, thereby increasing the information efficiency of stock prices.

Best Paper Award at the 2022 AsianFA Annual Meeting

Presentations: 2021 International Symposium on Human Capital and Labor Markets, 2022 KAFA Brown Bag Seminar, 2022 FMCG, 2022 PKU-NUS Annual International Conference on Quantitative Finance and Economics, 2022 ABFER, 2022 ITFA, 2022 AFES, 2022 AMES, 2022 AsianFA, 2022 AFAANZ, 2022 ESAM, 2022 CIRF, 2022 SIF, 2022 Corporate Finance Day, 2022 FMA, 2022 AASLE, 2022 CAFM, 2022 Boca Corporate Finance and Governance Conference, 2022 FMA Asia/Pacific, 2023 RES, 2023 SSES, 2023 CFRC, 2023 ESEM, 2023 SBFC, 2023 AFBC, 2024 SES, 2024 NASMES, 2024 EALE, Peking University HSBC Business School,  Sogang University, The University of Sydney
†(withdrawn due to COVID travel restriction or other reasons)

Declining worker bargaining power has been advanced as an explanation for major macroeconomic shifts in the U.S., such as declining labor share, reduced consumer purchasing power, and rising inequality. This paper explores microeconomic implications, focusing on the impact of declining worker power on firm-level investment responses to a labor cost shock arising from mandated minimum wage increases. Over four decades, we observe a shift in investment-wage sensitivities from negative to insignificant as management gains flexibility through enhanced outside options. This shift is more pronounced in firms that are more exposed to globalization, technological change, and declining unionization, reflecting broader trends in weakening worker power and its influence on corporate decision-making.

Best Paper Award at the 2022 Joint Conference with the Allied Korea Finance Associations

Presentations: 2020 Boca Corporate Finance and Governance Conference, 2020 CAFM, 2021 International Conference of the French Finance Association, 2021 EFMA, 2021 AFAANZ, 2021 WFC, 2021 EEA, 2021 FMA, 2021 NZFM, 2021 NYCU International Finance Conference, 2021 EWMES, 2021 AFBC, 2022 HARC, 2022 FMCG, 2022 SOLE†, 2022 Allied KFA, 2022 ESEM†
†(withdrawn due to COVID travel restriction)

This paper identifies an externality of a firm's unionization that affects the financing decisions of other, non-unionized firms within a local labor market. We find that non-unionized firms increase their market leverage ratios by 1.8 to 2.0 percentage points following a union victory at other firms. As an alternative coping strategy, non-unionized firms also hold less cash reserves. This "shadow union" effect is more pronounced when the probability of unionization rises by a larger margin (e.g., when non-union firms have a larger fraction of middle-to-low wage workers or when shadow unions are formed multiple times in local labor markets). In addition, the effect is stronger when non-union firms face higher union rents conditional on being unionized (e.g., labor-intensive firms, firms located in states with lower unemployment rates, or firms operating in less competitive industries). These results are consistent with the heightened threat of unionization following shadow union organizing. Overall, our findings suggest that a shadow labor market institution creates a strategic incentive for non-unionized firms to use less conservative financial policies to combat the union threat.

Best Paper Award in 2017 Auckland Finance Meeting