Research

Abstracts: This paper studies the repercussions of biased tax enforcement on firms' export performance. Mandated transparency at Customs enhances tax authorities' capabilities for scrutinizing exporting firms, potentially creating an implicit barrier to global market participation. Leveraging an institutional reform in China that introduced exogenous variations in tax enforcement practices for two sets of comparable firms, I estimate the impact of such information-based tax enforcement for manufacturing firms. I find that this bias leads to underperformance in export market, primarily in the intensive margin. Further investigation suggests that effects come from the product portfolio choices: firms under such bias display a great tendency to be a single-product exporter and have a smaller product scope. Heterogeneous effects underscore the paramount significance of fixed costs regarding exporting.

Abstracts: This paper investigates how trade facilitation affects firms asymmetrically. We ex- plore China’s “Single Window” reform, which streamlined administrative procedures in international trade, to elucidate within-country distributional effects. Leveraging the by-province roll-out of the reform, we find decreasing per-shipment fixed costs and increasing export value at the aggregate level due to quantity growth. The falling trade costs encourage entry of new firms, intensify competition, thus lead to null, if any neg- ative, impacts on top firms. Such pro-competition effects not only improve domestic allocation efficiency, the consequent declining export prices also signify welfare gains to international buyers. Our findings provide vital empirical insights for the real impacts of the trade facilitation reform.

Abstracts: Biomedical entrepreneurs increasingly rely on venture capital for growth and survival. Bearing the "liability of newness", biomedical startups are susceptible to environmental risks that adversely affect venture capital inflows and damage the commercialization prospects of potentially life-saving innovations. Complementing prior research which explores environmental risks, our study examines how failure in the governance of biomedical science affects venture capital funding. Our findings indicate that retractions of biomedical articles negatively affect the venture capital funding received by biomedical startups. Venture capitalists (VCs) tend to draw negative generalizations about biomedical technologies from the retractions. Interestingly, we find that such negative effects even extend to startups working on biomedical technologies unrelated to the retracted articles, highlighting the potency of the generalization effects. Furthermore, we find the negative effects to be stronger for risk-averse VCs, i.e., VCs that have prior experience of failed investments in biomedical startups, offer debt-based financing, and operate in less mature financial markets. Ultimately, our research alerts biomedical entrepreneurs to the institutional risk posed by academic retractions and offers insights for a more strategic selection of VCs for fundraising.

Abstracts: Featured by reallocation of resources across sectors, structural transformation, which lies in the center of economic growth, requires a healthy financial system distributing credit to its most productive use. This paper tries to understand the effects of nonperforming loans, regarded as one of the key risks faced by commercial banks, on the structural transformation. Leveraging the establishment of four national asset management companies in China, we find that helping commercial banks to get rid of nonperforming loans stimulates the credit supply in the market (mostly for privately held firms), shrinks the agricultural sector, and encourages industrial firms to invest and upgrade, which speeds up the transformation process.