Working Papers

Financing the Green Transition of "Brown" Sectors (with Hao Liang, Yi-Cheng Shih, Yao Wang, Zhenshu Wu, and Tianhao Yao)

Abstract: We examine whether lower financing costs facilitate firms’ transition toward greener activities, a central premise of transition finance. Using a novel dataset on green and brown revenues of Chinese listed firms, we find that lower debt costs predict a greener revenue mix, particularly among firms in brown industries. A shift-share instrument supports a causal interpretation, while two policy interventions provide complementary evidence. The relation is stronger for smaller firms, firms with green technologies, and subsidized firms. Lower financing costs also predict green investment and products. International evidence shows a similar relation between the implied cost of capital and taxonomy-eligible revenues.

Presentations: 2026: Fudan University; GRASFI (Poster); AsianFA; CICF; ARCS. 2025: NBER Climate Finance PhD Workshop.

Incident-Driven ESG Engagement (with Hao Liang and Mandy Tham)

Abstract: Using proprietary engagement records from a large European asset management company, we study how ESG shocks shape institutional monitoring. We find that salient negative incidents are a powerful trigger for engagement, as they deteriorate public sentiment, heighten investors’ reputational concerns, and reveal new information about previously hidden ESG weaknesses. Investors respond not only to incidents involving focal firms but also to incidents at peer firms, consistent with both reactive monitoring of revealed ESG risks and preemptive monitoring based on shared risk signals within the competitive environment. Incident-driven engagement is more informed and consequential: it mitigates subsequent sentiment deterioration, reduces future ESG incidents, attenuates declines in institutional ownership, and contributes to higher firm value. Finally, more intensive engagement is significantly more likely to succeed. Overall, our research speaks to the fundamental question of how engagement is initiated and underscores its role as an effective channel of external corporate governance.

Awards: Massey Sustainable Finance Conference Best PhD Paper

Presentations: 2026: Paris December Finance Meeting*; FMA*; HEC-HKUST-NUS Workshop on Sustainable Finance*; GRASFI; FIRN Asset Management Meeting; AsianFA; SMU Finance Research Summer Camp; BI-NBER-NYU Climate and Nature Finance Conference (Poster); Korea University-KAIST Seminar; University of Luxembourg; Sustainalytics. 2025: New Zealand Finance Meeting; AFBC; FMA Asia/Pacific; Massey Sustainable Finance Conference

* Scheduled