Working Papers

Advising Sophisticated Customers: Evidence from Health Insurance Brokers [SSRN Link]

Abstract: Conventionally, receiving kickbacks by brokers is thought to be detrimental to customers. However, this might not be true if the customers are sophisticated. Focusing on the employer-sponsored health insurance market, this paper examines how brokers advise large employers and the consequences of brokers' incentive changes. I find that a reduction in brokers' kickbacks can adversely affect broker-intermediated plans, resulting in higher premiums and worse plan qualities, likely due to brokers' decreasing effort in information acquisition. Better-governed firms control premium increases by discontinuing the brokerage service. The negative effect on premiums occurs for public firms, but not for private firms that are less sophisticated and receive lower-quality advice even before. Firms in more competitive brokerage markets experience less premium distortion. Overall, regulations on brokers' compensation can have unintended consequences on sophisticated customers.


Fired Up or Burned Down: Wildfires and VC Investment (with Wen Wang and Zhengchu Zhang) [SSRN Link]

Abstract: Using granular data on Californian wildfires and smoke, we examine the behavior of venture capitalists (VCs) and VC-backed startups after such events. We find that VCs are more likely to invest in ESG-oriented startups following wildfires, but decrease their average investment amount. We differentiate the effects of wildfires from smoke, uncovering the underlying mechanism of salience bias and mood effects. For VC-backed startups, we observe an increase in green patent production following wildfires, indicating a shift towards more environmentally friendly innovations. While wildfires do not affect startups' near-future financing opportunities, they pose detrimental effects if encountered during the startups' nascent stage.


Green Products (with Wan-Chien Chiu, Po-Hsuan Hsu, and Kai Li) [SSRN Link]

Abstract: We apply a novel text-based classification procedure to identifying green marks in the USPTO trademark dataset and study the development of environmentally friendly products and services in the U.S. economy over the past forty years. Given the "use in commerce" requirement for trademarks, our data are in a unique position to capture newly commercialized green products and, thus, firms' commitment to environmental protection and sustainability. We first show that manufacturing, energy, and services are the top three sectors in developing green products in the U.S. economy. We next show that firms with more green products are associated with higher environmental ratings and lower greenhouse gas emissions. Moreover, firms' green products are associated with greater future revenue growth and higher firm value. Leveraging the granular textual data in a mark's application, we show that green products are significantly more valueenhancing when they are a firm's core business, are not greenfield, or are introduced together with other non-green products in the same product space. As far as we are aware, we are the first to shed light on whether and how green products help increase sales and firm value. Finally, we provide causal evidence that firms launch green products in response to natural disasters in neighboring counties or their peers' environmental scandals. We conclude that firms' development of green products and services is associated with tangible real environmental outcomes and superior financial performance. 


Retention Costs or Human Capital Investments: A Dual Perspective on Employer-Sponsored Health Benefits (with Xuelin Li)

Draft available upon request

Abstract: Employer-sponsored health insurance is the predominant coverage source for the U.S. workforce, yet the rationale behind firms' provision of these benefits remains debated. We examine two primary motivations: as a retention mechanism reducing employee turnover, and as a human capital investment enhancing workforce productivity. To disentangle these perspectives, we exploit policy-induced shocks to labor mobility and track firms’ benefit adjustments. We employ a stacked difference-in-differences approach using novel datasets on health plan details, individual healthcare utilization, and state-level variations in non-compete agreement (NCA) enforceability from 2013 to 2020. Our results show that increased NCA enforceability leads firms to lower premiums primarily by shifting to High-Deductible Health Plans (HDHPs). This shift, in turn, boosts HDHP enrollment rates and significantly reshapes healthcare utilization among affected employees, leading to fewer preventive care visits but a greater incidence of severe, high-cost medical procedures. Overall, our findings support the retention cost perspective while also highlighting the unintended long-term consequences of cost-saving strategies.