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Publications
Publications
Aggregated Compensation Peer Group Disclosure and Managerial Labor Market Competition: A Network Analysis, with Ray Gao.
In this paper, we develop novel measures of managerial labor market classification and competition by constructing networks of compensation benchmarking peers disclosed in proxy statements. These networks represent firms’ relative positions within the managerial labor market. Our classifications strongly predict executive moves across firms, outperforming a comprehensive set of predictors in the literature. Subsequent tests further demonstrate the strength of our methodology in capturing the multidimensional and dynamic features of the managerial labor market. We also validate our competition measures by showing that they are associated with retention tools, such as higher equity pay and longer pay duration. Finally, we apply our measures to test two theoretical predictions. First, we find that labor market competition could explain controversial pay practices. Second, we demonstrate that the labor market provides managers with tournament incentives to deliver superior future performance.
Forthcoming at The Journal of Accounting Research
WFA Trefftzs Award for the Best Student Paper (2023); WFA Brattle Group PhD Candidate Award for Outstanding Research (2023)
Does Foreign Investors’ Information Access Vary with Geopolitical Tensions? Evidence from Corporate Conference Calls, with Joanna Wu and John Yang.
We study how foreign investors’ access to corporate information varies with pairwise geopolitical tensions between the investor’s and investee’s countries. Using a sample of 1,760 country-pairs, we find that geopolitical tensions between a conference call host firm’s country and a foreign country relate negatively with investor participation from that foreign country as well as the quality and tone of management responses in the call, suggesting reduced foreign investor information access with rising tensions. A single-country analysis of Chinese AB-share firms produces similar inferences. With higher China-foreign tensions, foreign attendance at private meetings with management declines and English translations of local language disclosures become less frequent and shorter in length. Curtailment in English translations is more pronounced when local language disclosures contain politically sensitive words, suggesting lower information supply by firm choice. Reduced disclosures from geopolitical tensions are impounded in foreign investors’ asset pricing decisions, resulting in steeper foreign-share price discounts.
Forthcoming at The Journal of Accounting Research
Working Papers
Working Papers
I examine whether and how ESG transparency affects investment efficiency. Exploiting the staggered coverage of LSEG ESG ratings (previously Thomson Reuters Asset4) as an exogenous shock that increases ESG transparency, I uncover a reduction in investment-q sensitivity, indicating lower investment efficiency after coverage initiation. Consistent with reduced managerial learning, I show that greater ESG transparency improves price informativeness for emissions but crowds out fundamental information from the stock price, as managers solicit less feedback from market reaction to capex forecasts. The decline in investment efficiency is more pronounced among firms with higher initial ownership by ESG fund, whose trading crowds out fundamental information. Consistent with managers deviating from shareholder value maximization, I find that firms increase environmental investments while reducing regular investments following the shock. Due to increased scrutiny, firms with poorer initial environmental performance experience larger reductions in investment efficiency. Overall, the results suggest that more ESG transparency impairs real efficiency by constraining managerial learning and driving firms’ objectives away from maximizing shareholder value.
Mandatory Pay Disclosure and Corporate Human Capital Investment, with Xingyu Shen, Xixi Xiao, and Eric Yeung.
We examine the effect of state-wide mandatory pay disclosure on firms’ human capital investments, leveraging Colorado’s recent Equal Pay for Equal Work Act (EPEWA) that mandates job-specific pay disclosure in job postings in Colorado. Empirical results from difference-in-differences analyses suggest that firms shift hiring from Colorado to other states in response to the EPEWA. The hiring shift is consistent with firms’ economic trade-offs between the higher expected labor costs and the costs of relocating positions. Our findings highlight that pay disclosure mandates that reduce information frictions in state-wide labor markets impose costs on firms, which incentivize them to redistribute their human capital investments.
“We Are Big, Join Us!” An Examination of Companies’ Size Advertisement in Job Listings, with Ciao-Wei Chen and Laura Li.
This study utilizes Generative Pre-trained Transformer (GPT) to analyze how U.S. public firms present themselves in job postings, focusing on references to company size. We show that companies strategically emphasize larger size when they have low public visibility, employ mostly low-wage workers who value training and security, or face slow sales growth and financial challenges. These findings suggest that companies use size advertisement in job postings when it is likely to be more effective and when they lack other desirable attributes. Notably, these disclosure incentives have a greater impact on large firms than on small firms, indicating firms’ reluctance to make false claims about size. Finally, we find size advertisements are associated with shorter vacancy duration for low-salary positions and particularly for firms with low visibilities. Overall, these findings reveal the complexities of voluntary disclosure in the labor market, offering insights for job seekers to better evaluate firms’ self-branding in job postings.
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