Published and Working Papers

• “The Role of Corporate Political Connections in Commercial Lawsuits: Evidence from Chinese Courts” Comparative Political Studies. 2020; 53(14), pp.2321-2358.

Like courts in democratic regimes, courts under authoritarianism play an important role in the regulation of complex economies. In particular, scholars suggest that authoritarian judiciaries are commonly encouraged to provide independent adjudication in the context of economic disputes between firms. Yet because regime insiders are often connected to firms, judges have strong incentives to consider the political implications of their decisions even in areas of the law where they are allegedly more independent. In this paper, I propose a new theory about the role of corporations' political background in commercial lawsuits. Using a dataset on the litigation outcomes of firms in China, I find that the composition of a firm's board membership is a significant predictor of its lawsuit outcomes. A higher percentage of corporate board members with political connections leads to a higher probability of lawsuit success. The results point to the limitations of the selective judicial independence theory.

• “Partners with Benefits: When Multinational Corporations Succeed in Authoritarian Courts” (with Freddy Chen) International Organization. 2023;77(1):144-178.

         -  Winner of the David A. Lake Award for the Best Paper Presented at the 2019 IPES Conference

Scholars often assume that courts in authoritarian regimes cannot credibly protect foreign investors' interests because these institutions lack judicial independence. In this article, we construct a novel dataset on multinational corporations' litigation activities in Chinese courts from 2002 to 2017. In doing so, we provide the first systematic case-level analysis of foreign firms' lawsuit outcomes in an authoritarian judiciary.  The original dataset shows that foreign companies frequently engage in litigation in authoritarian courts. Moreover, we theoretically and empirically distinguish between two types of government-business tie in terms of their effectiveness in incentivizing the host state to protect foreign investors' interests. We argue that ad hoc, personal political connections deliver only trivial lawsuit success for multinational enterprises, while formal corporate partnerships with regime insiders can lead the state to structurally internalize foreign investors' interests. In particular, we demonstrate that joint venture partnerships with state-owned enterprises help foreign firms obtain  more substantial monetary compensations than other types of multinational enterprise. By contrast, the personal political connections of foreign firms’ board members do not generate a similar effect on securing meaningful judicial favoritism. These findings are robust to tests of alternative implications, matching procedures, and sub-sample robustness checks. This article advances our understanding of multinational corporations' political risk in host countries,  government-business relations, and authoritarian judicial institutions.

• “Differential Public Support and the Independence of Anti-corruption Agencies” (with Jing Xu) European Political Science Review. 2024;16(1):72-93a

Specialized anti-corruption agencies (ACAs) aim to address corruption problems when conventional institutional mechanisms are dysfunctional. Yet, we still lack thorough understanding of the conditions that enable ACAs to withstand undue influences of the overarching political regime. Informed by the judicial politics literature, we examine the value of public opinion in empowering ACAs. Leveraging the evolving political conditions of Hong Kong, we argue that a lack of public support for other government organs offers opportunities for an ACA to distinguish itself from the rest of the regime and establish operational independence. We find that a signature ACA of Hong Kong, created by the British colonial government, has been uniquely sensitive to public complaints of corruption. The agency is the most responsive when other government branches are perceived to be lacking integrity. Also, negative appraisals of the political regime encourage the ACA’s institutional functions and increase the degree of enforcement discretion entrusted to it. Our findings suggest a mechanism of ACA empowerment whereby the public is committed to sustaining agency independence because of their distrust and the unpopularity of other government organs. Therefore, potential institutional threats posed by an unpopular regime to the ACA may actually strengthen the latter’s power and autonomy.

• “Rethinking Institutional Arbitrage: De Jure Exposure and De Facto Enforcement”  Global Strategy Journal (forthcoming)

         - AOM 2020 IM Division Georgetown Best Paper in International Business and Policy Finalist

This paper disentangles the de jure and de facto dimensions of institutional distances to examine their impact on firms embedded across heterogeneous jurisdictions. I argue that significant transaction costs occur only when the de facto implementations of regulations from both home and foreign jurisdictions become irreconcilable. Using an original dataset of the enforcement actions of the U.S. Foreign Corrupt Practices Act (FCPA), I find that institutional arbitrage becomes infeasible for non-US-based firms with de jure exposure to the FCPA when the de facto judicial constraints over bureaucratic discretion are weak in these firms’ home countries targeted by FCPA enforcement. De facto FCPA enforcement makes such US-listed firms more likely to divest from their home markets or voluntarily delist from U.S. stock markets.

• “Unsolicited Justice: the Impact of FCPA Prosecutions on Corruption and Investment”  Review of International Political Economy (conditional acceptance)

Can transnational anti-corruption enforcement improve governance outcomes in the targeted host countries? Conventional research has focused on the responses of state and firms separately to such legal interventions, instead of changes in the way of interactions among different actors. This paper provides a systematic analysis of the affected local business environments by examining the responses of firms and government officials as a whole to the transnational legal scrutiny. The study uses an original dataset on the enforcement actions of the Foreign Corrupt Practices Act (FCPA) to examine its impact on political risks faced by multinational corporations (MNCs) and changes in their behavior. I argue that transnational law enforcement provides a form of institutional subsidy to developing countries that lack robust legal regimes. I find that FCPA enforcement discourages actors on both ends of corrupt exchanges: host government officials who receive bribes and MNCs who offer bribes. However, external enforcement only raises the costs and the threshold of engaging in bribery. Firms are pressured to pursue more lucrative business deals as risk premiums, and firms that cannot sustain corrupt arrangements lose rent-seeking opportunities. This paper has important implications for the global rule of law and transnational regulation, especially regarding emerging economies.

• “Business Environment after SOE Reforms: How Unemployment Discourages Foreign Investments” (with Jing Xu) (R&R)

State-owned enterprise (SOE) reforms have resulted in mass layoffs in many post- communist regimes. Combining city-level unemployment data obtained from government archives in the 1990s with firm-level financial data, this paper investigates the lasting impact of reform-induced unemployment on China's businesses environment for foreign investors. We find that cities with higher unemployment rates arising from SOE reforms have fewer foreign businesses after China's WTO entry, as measured by the total number of firms as well as the amount of capital investments, around the end of the reforms. We further show that there are two mechanisms at play. First, high unemployment rates reduce municipal fiscal expenditures on educational, medical, governance, and other social services. The worsened infrastructural and institutional quality discouraged foreign investors. Second, citizens attribute their unemployment status and economic grievances to foreign competition, which increases public hostility towards Western countries. Importantly, additional analyses suggest that non-Western countries, such as Russia, are not affected. Also, SOEs gain greater market shares at the expenses of foreign and private firms due to rising unemployment. Overall, the findings show that unemployment problems caused by SOE reforms constitute a negative pull on a country's path towards establishing an open and competitive market economy.

• “Double jeopardy: FCPA enforcement and MNC risk-mitigation strategies”  Asian Review of Political Economy 3, 1 (2024)

Does transnational anti-bribery enforcement affect the risk-mitigation strategies of firms? This paper uses an original dataset on the enforcement actions of the Foreign Corrupt Practices Act (FCPA) to examine the law’s impact on corporate behavior and political risks for multinational corporations (MNCs). I argue that corrupt institutions are not necessarily undesirable for foreign investors. Foreign firms seek above-normal returns in high-risk markets through informal exchanges with the host government. FCPA enforcement provides a “fire alarm” that affects firms differently given their sensitivity to corruption concerns. FCPA enforcement has unequal deterrence against corporate misconduct, encouraging some firms to adopt transparency norms while incentivizing other firms to be more insidious in their corrupt business practices. I use a partial observability bivariate probit model to estimate the unobservable propensity of firms to engage in corrupt exchanges. Then I examine the impact of FCPA enforcement on Chinese FDI, and find that Chinese investments are deterred from markets with robust legal institutions. The FCPA’s deterrence effects against corrupt competitors is a positive outcome for U.S. MNCs. However, American companies experience diminished returns in countries with strong investor protection regimes. External legal interventions under the FCPA generate regulatory burdens on U.S. that limit their business opportunities.

Works in Progress

• "Compliance in Non-compliant Territories: How Jurisdictional Exposure Regulates Multinational Corporations" (with Frederick Chen)

• "Innovation Support, National Security, and MNC Activities" (with Siyao Li)

• "Multinational Enterprises’ Participation in Standards-setting in Host Countries" (with Haosen Ge)

• "MNCs' Intellectual Property Rights Protection in Authoritarian Courts (with Lizhi Liu)"

• "Foreign Direct Investment, Modes of Entry, and Anti-corruption Compliance"

• ”Multinational Corporations’ Contingent Preferences for Trade Openness” (with Wendy Leutert)