Selected Works

The Biodiversity Impact of Renewable Energy (with Chen Lin, Zacharias Sautner, and Thomas Schmid)

Presented at The Academy of Mathematics and Systems Science of Chinese Academy of Sciences, ZJU

Abstract: Renewable energy (RE) is vital for addressing climate change, but the land use of hydro, solar, and wind plants can negatively affect biodiversity through habitat destruction. By combining spatial biodiversity data, satellite imagery, and asset-level information on 40,911 RE plants, we develop a novel measure of RE’s biodiversity impact around the world. We find that solar plants cause the greatest negative impact overall, while hydro plants are located in the most biodiversity-sensitive areas. The biodiversity impact of RE has grown substantially over time, driven by increased land use and siting in more biodiversity-sensitive locations. The top 1% of plants and owners are responsible for the majority of the impact. We use our measure in three corporate finance applications. Publicly-listed and non-financial ownership, as well as balance-sheet financing, are each associated with siting RE projects in higher-impact locations, while private and financial ownership, as well as project finance, align with lower-impact siting choices. These results suggest that ownership structure and financing design translate into systematically different environmental footprints in project siting. 

Weathering the Market: How Insider Trading Responds to Operational Disruptions (with Xu Li, Chen Lin, and Mei Sheng)

Best Paper Awards, 9th National Financial Doctoral Academic Forum

Presented at AAA 2024 Annual Meeting, FMA 2024 Annual Meeting, EAA 2024 Annual Congress, 14th FMGC, HKU, 2nd HKU Summer Finance Workshop, 2024 International Conference of the Journal of International Accounting Research, RUC, CUFE, SUFE, UIBE, WHU

Abstract: We investigate the impact of severe snowfall induced operational disruptions on insider trading. Using geospatial analytics and establishment-level data, we find that insider trades during snowfall events predict significantly lower future firm returns, accompanied by increased sales volume from insiders. We show that senior insiders with operational roles are particularly effective at avoiding losses during these periods, especially in less complex firms and those with prior snowfall experience. The effects are more pronounced when snowfall is more severe. We also provide direct evidence that firms under severe snow strikes experience significant declines in both revenue and profitability. Notably, insider trading during these weather events faces lower litigation risk compared to trading on traditional private information. Our findings demonstrate how insiders can capitalize on their operational knowledge to interpret extreme weather disruptions while maintaining regulatory compliance.

Electoral Cycle of Pollution: Evidence from India (with Pulak Ghosh, Abhiroop Mukherjee, and Jian Zhang)

Presented at FMA 2023 Annual Meeting, HKU

Abstract: This study investigates the relationship between electoral incentives and air quality in India, a country facing severe air pollution challenges. Leveraging quasi-exogenous variation in the staggered timing of general elections and using satellite-based air pollution data, we examine how air quality fluctuates in response to electoral cycles. We find that air pollution levels drop by approximately 5% during election periods, followed by a rebound post-election. This electoral cycle effect is most pronounced in constituencies where incumbents wield political power, face strong electoral competition, and where pollution levels are severe. We also review how this air pollution cycle could stem from coal-fired power activities, construction and demolition activities, and delays in public hearings on pollution-related projects. The findings suggest that while electoral incentives can lead to temporary improvements in air quality, sustained environmental protection requires long-term political commitment.

When Regulation Bites: How Environmental Shocks Reveal Hidden Costs of Regulation (with Xu Li, and Mei Sheng)

Best Paper Awards, 14th FMGC

Presented at ABR-Fudan Joint Conference, 14th FMCG, HKU, HKPolyU, Harbin Institute of Technology,

Abstract: We investigate how unexpected environmental shocks reveal hidden costs of regulatory oversight. Using a novel dataset of global snow events and exploiting variation in regulatory oversight across jurisdictions, we find that auditors subjected to regulatory oversight experience a significant increase in audit deficiencies when affected by severe snowfall. This effect occurs despite the general improvement in audit quality associated with regulatory oversight. This negative impact is amplified by snowfall intensity, the recency and frequency of regulatory inspections, and the stringency of local regulatory oversight. The study provides novel insights into the unintended consequences of stringent regulatory compliance pressure during operational challenges as well as the real impact of environmental factors on professional service quality.