Felix Zhiyu Feng

Department of Finance and Business Economics

Michael G. Foster School of Business

University of Washington

Tel: 206-543-4476 Email: ffeng@uw.edu

My main area of research is corporate finance, with specific interests in dynamic agency, contract theory, corporate governance, and institutional investment. Prior to joining UW, I was an assistant professor of economics at the University of Notre Dame and a concurrent assistant professor of finance at the Mendoza College of Business. I received a PhD in Economics from Duke University in 2014 and am a current member of the Finance Theory Group.

Published and Forthcoming Articles

Dynamic Resource Allocation with Hidden Volatility, with Mark Westerfield (2021), Journal of Financial Economics, 140(2). 560-581

  • We study a firm's internal resource allocation problem in a dynamic principal-agent model with endogenous cash flow volatility. The optimal contract can be implemented with a constant pricing schedule -- a static, decentralized, linear mechanism -- that rationalizes the use of hurdle rates above firms’ cost of capital and transfer prices above the marginal cost.
  • Presented at: FTG (MIT), CICF, Econometric Society NASM, MWET, Duke, BU, Minnesota, UBC, UT-Dallas, Tsinghua PBC, CKGSB, CUHK

Dynamic Compensation under Uncertainty Shocks and Limited Commitment (2021), Journal of Financial and Quantitative Analysis, 56(6). 2039-2071

  • Excessive risk-taking, lower bonus hurdles, and substantial compensation to corporate managers during a financial crisis? They can be part of an optimal contract when firms face systemic uncertainty shocks but cannot fully commit to long-term contracts.
  • Presented at: AFA (Boston), EFA (Cambridge), SED, Econometric Society NASM, Northwestern Workshop on Relational Contracts, Duke, Oxford, UW, Notre Dame, Georgia State

Caught in the Crossfire: How the Threat of Hedge Fund Activism Affects Creditors, with Qiping Xu and Caroline Zhu (2021), Journal of Empirical Finance, 64. 128-143.

  • Firms under the threat of hedge fund activism on average experience significant losses of outstanding bondholder wealth and receive inferior terms when initiating new loans.
  • Presented at: NFA, Southwestern Financial Symposium, Manchester Univ. Role of HF Conference, SUNY Albany Financial Market Symposium, Duke, Notre Dame, LUC, Kansas

Productivity and Liquidity Management Under Costly Financing, with Jianyu Lu and Jing Wang (2020), Journal of Corporate Finance, 63. 101258

  • More productive firms could demand less capital assets and hold more liquid assets compared to less productive firms when financing costs are sufficiently high.
  • Presented at: MFA, FMA, RES, SWFA, MEA, ICCEF, Duke, Notre Dame, Michigan

Working Papers

Opaque Information and the Incentives of SPAC Sponsors, with Tom Nohel, Xuan Tian, Wenyu Wang and Yufeng Wu

  • We model and estimate the strategic interactions between SPAC sponsors, targets, and investors using a comprehensive database with sponsor concessions, earnouts, redemptions, etc., and find pervasive agency costs in this market.
  • Presented at: FMARC, Onwers as Strategists Conference, Indiana University

Setbacks, Shutdowns, and Overruns, with Curtis Taylor, Mark Westerfield, and Feifan Zhang

  • Although overruns and cancellations are commonly viewed as failures of project governance, such outcomes are necessary features of the optimal project management when random setbacks arise naturally during development.
  • Presented at: NBER (organizational economics), FTG (Yale), SITE, SFS Calvacade, Stony Brook ICGT, Econometric Society NASM, MWET, Duke, Cornell, HKUST

Financing a Black Box: Dynamic Investment with Persistent Private Information

  • What happens when agency frictions in a dynamic investment model have persistent effects?
  • Presented at: AEA (Boston), SIOE, IIOC, EWMEC, AMU Entrepreneurial Finance Conference, AEFIN Finance Forum, DSE Winter School, ISEAPA NAPW, CIRF, CMES, EARIE

The Value of Activism: A Hedge Fund Investor's Perspective, with Chengdong Yin and Caroline Zhu

  • On average, an activist hedge fund’s intervention targets do not perform differently from its non-target holdings. The targets do outperform, however, in the first month of intervention, especially if the fund has prior intervention experience or is familiar with the target industries.
  • Presented at: SFS Calvacade Asia, AEFIN Finance Forum, Boca Corporate Finance and Governance, APAD, FMCG, MFA, KER, SUFE, SWUFE, USTC-UW Fintech Workshop

Renegotiation and Dynamic Inconsistency: Contracting with Non-Exponential Discounting, with Doruk Cetemen and Can Urgun

  • We introduce dynamic inconsistency into a Sannikov (2008)-style optimal contracting problem and provide a novel argument for the existence and characteristics of the solution.
  • Presented at: SITE, SAET, ESSET (Gerzensee), Econometric Society NASM, Pricenton, Yale, NYU, LSE, Bristol, QMUL, Warwick, Bilkent, Collegio Carlo Alberto
  • Revise & Resubmit, Journal of Economic Theory, 2nd round

Foreign Competition and CEO Risk-Incentive Compensation, with Tor Erik-Bakke, Hamed Mahmudi, and Caroline Zhu

  • How do firms optimally adjust CEO risk-incentive compensation in response to increased foreign competition? The answer is theoretically ambiguous but can be empirically identified through a quasi-natural experiment.
  • Presented at: MFA, RES, Notre Dame, Oklahoma
  • Revise & Resubmit, Journal of Corporate Finance, 2nd round

Selected Work-in-progress

In Search of A Unicorn, with Yifan Luo

Looking the Other Way: The Screening Role of (Weak) Internal Governance, with Wenyu Wang and Yufeng Wu

Teaching Experience

University of Washington: Financial Theory and Analysis, Financial Strategy and Planning, Business Finance (Global EMBA)

University of Notre Dame: Intermediate Microeconomic Theory, Asset Pricing Theory

Duke University: Advanced Microeconomic Analysis, Advanced Topics in Financial Economics, Introduction to Econometrics, Time Series Analysis