Working Papers 

Being able to sell a business offers some value beyond what a firm can generate based on its own resources and capabilities. Thus, barriers to business transfers will affect not only the choice to sell but also whether to close or continue and, by induction, business entry. We test this using data on U.S. establishments in the context of judicial adoptions of product line exceptions that created such barriers. We find that after adoption, and relative to non-manufacturing establishments, exits of manufacturing establishments through acquisitions decrease, while exits through closure increase. Relative entry of manufacturing establishments declines. These effects are higher in capital-intensive industries. Interestingly, while the likelihood of acquisitions declines for older establishments, it increases for younger ones.

Does Navigating Adversity Call for Experienced Hands? Executive Composition and Compensation during the US-China Trade War (Joint with Haibing Shu and Jagadeesh Sivadasan). 

Executive human capital could be an important asset for companies navigating adverse shocks that impede their normal operations. Leveraging the U.S.-China trade war in 2018 as a plausibly exogenous source of negative trade shocks, this study examines how firms alter the composition of their executive team to manage adversity. We find that firms more affected by the trade shock hire more executives with overseas experience, especially those with both overseas background and marketing expertise, and those with European background. Consistent with greater demand for such human capital after the start of the trade war, we find that executives with overseas experience received greater compensation, particularly in the form of equity-based compensation, after the start of the trade war. Furthermore, we find that firms with more overseas experienced executives obtain relatively higher overseas revenue after the conflict, and the unexpected departure of executives with overseas experience was associated with a stronger negative stock market reaction, in the post-trade war period. Overall, we provide evidence that firms restructure executive composition to address adversity, by hiring executives with relevant experience.


Employment Decline during the Great Recession: The Role of Firm Size Distribution (solo), Economic Journal, Volume 133, Issue 652, Pages 1586-1625.

The older SSRN version is here. Download slides. 

Over eight million jobs were lost in the Great Recession, creating widespread economic hardship. This paper documents a novel and robust empirical regularity, that highly concentrated local labor markets experienced larger employment declines during the Great Recession. Through setting up a model with heterogeneous firms facing idiosyncratic productivity shocks, I show that firm size distribution summarized by the Herfindahl-Hirschman Index (HHI) plays a crucial role in the reallocation of workers, and it magnifies negative idiosyncratic shocks and attenuates positive ones. I undertake a series of empirical tests to rule out alternative explanations, and show that large employment losses in concentrated labor markets are not driven by highly concentrated industry-locations being hit harder during the Great Recession, having smaller labor markets, or higher firm leverage ratios. The effect of concentration level is larger in sectors with higher labor supply elasticity, or a higher variance of productivity shocks, and rises during the Great Recession compared to other periods, consistent with my model’s predictions. 

Social Insurance and Entrepreneurship: The Effect of Unemployment Benefits on New-Business Formation (solo), Strategic Entrepreneurship Journal, Volume 16, Issue 3, Pages 522-551.  

An introduction of the paper on SMS 2022 press release and SMS blog.

This paper studies the impacts of social insurance on the decisions of unemployed individuals to start businesses. Exploiting staggered changes in benefit generosity across U.S. states and over time, I find that higher unemployment insurance (UI) benefits both lower the probability that an unemployed person will become self-employed, and also extend the length of time that passes before they make such a transition. The negative effects of UI benefits are concentrated on the formation of unincorporated businesses. Unincorporated businesses created by unemployed people in higher-benefit state-periods tend to be more successful, as measured by profit and survival rate, suggesting that higher benefits mainly screen out the entry of less productive firms. The negative effects are smaller during non-recession periods and in states that offer a Self-Employment Assistance program. 

Missing Women in India: Gender-Specific Effects of Early-Life Rainfall Shocks (Joint with Jagadeesh Sivadasan), World Development, Volume 148, Article 105652.  

Older SSRN version is here.

Publications (in Chinese)