Zhenkai Ran - Research

Working Papers

Abstract: This paper introduces a novel measure of firm-level managerial attention to financial markets, constructed from earnings call transcripts spanning 98,010 firm-year observations (2007-2023). Firms whose managers devote greater attention to financial markets exhibit greater investment-price sensitivity, supporting the price feedback theory. Managerial attention also shapes financing choices: high-attention firms are likely to avoid equity issuance in favor of debt, consistent with the pecking order theory, but become more willing to issue equity when market conditions are favorable. I document persistent heterogeneity in attention across industries, likely driven by differences in information asymmetry their business activities present to external financial markets.
Presentations: University of Cambridge, CEAM Cavalcade, 2025 Durham Finance Job Market Paper Conference, Swiss Finance Institute "Rising Scholar Conference in Finance 2025" at UZH, CEPR Paris Symposium 2025 (Scheduled)

Ran, Zhenkai, (2025) Peaks and Pitfalls: Stock Price Highs and Corporate Investment [Preliminary Draft Upon Request]

Abstract: Why do companies perform poorly after reaching record-high stock prices? While market corrections are often blamed, this paper shows that managerial psychology plays a key role. When stock prices peak, managers tend to attribute this success to their own abilities, leading to overconfidence. This triggers excessive investment and risk-taking, ultimately hurting performance. The effect appears even in companies with efficient stock pricing and becomes stronger when industry peers also experience high valuations. Overconfident CEOs show these patterns most clearly, suggesting psychological bias drives post-peak declines.
Presentations: 7th QMUL Economics and Finance Workshop for PhD & Post-doctoral Students

Abstract: Distinguishing value from values has been a challenge in sustainable investing (Starks 2023). Leveraging the Tick Size Pilot Program (TSP)—a natural experiment that increased treatment firms’ tick size from one cent to five cents—we find that green institutional investors with a relatively low willingness-to-pay for environmental objectives (i.e., value investors) significantly influence corporate environmental policies. During the TSP, these value investors reduced their divestment intensity following environmental incidents at treatment firms, relative to control firms. Treatment firms’ environmental ratings declined, with the drop most pronounced among those highly exposed to exit threats on environmental issues.
Presentations: Cornell University, China International Conference in Finance (CICF), Adam Smith Sustainability Conference, 8th SAFE Market Microstructure Conference, University of Cambridge, International Corporate Governance Conference, 5th Annual Boca-ECGI Corporate Finance and Governance Conference, AFA 2025 Poster Session, the Microstructure Exchange seminar, 6th Annual Conference of the Canadian Sustainable Finance Network (CSFN), Edinburgh Corporate Finance Conference

Ran, Zhenkai, P. Raghavendra Rau, and Joshua Rauh (2024): To Match or Not to Match: Financial Constraints and Corporate Pension Matching Policies [Preliminary Draft Upon Request]

Abstract: This paper examines the impact of financial distress on corporate pension matching policies. Using a comprehensive dataset covering contribution details for approximately 10,000 employers and 2 million employees in the UK from 2012 to 2020, we show that distressed firms significantly reduce pension matching intensity, particularly those with high financial leverage, high asset intangibility, or operating in deep labor markets. Employees in distressed firms, however, do not increase their contributions to offset these reductions suggesting a limited response to reduced employer contributions.

Publications

Abstract: This study examines how the level of detail in legal regulations impacts crowdfunding. We find that clear, explicit regulations significantly boost crowdfunding volumes in a global sample of digital finance. Using proxies to measure regulatory detail in three types of countries: countries that sometimes, always, or never had regulation, in a series of difference-in-difference regressions, we show a significant positive relation between regulatory clarity and the level of debt crowdfunding. There is little effect on the level of equity crowdfunding. Clear regulations appear to encourage the creation of new crowdfunding platforms rather than concentrating activity in existing ones.

Pre-PhD Projects

Abstract: We investigate the cross‐section asset‐pricing patterns of major cryptocurrencies from 2017 to 2021. We show that the basis, momentum, and basis–momentum factors earn statistically significant excess returns, a result consistent with the findings reported in the commodity futures literature. The basis is the strongest signal predicting cross‐sectional differences in cryptocurrency futures returns; the momentum‐induced risk premium is not statistically powerful, whereas the basis momentum‐induced risk premium disappears when accounting for the basis‐induced risk premium. Daily factor returns are statistically much stronger than weekly factor returns. Monthly factor returns are nonsignificant.

Abstract: We contrast and evaluate two of the most popular responsible investing strategies employed at present: negative screening and engagement. As a backdrop, we consider the challenges faced by the University of Cambridge, which mirror those experienced by institutional investors worldwide. Specifically, we make use of issues raised at the recent “Divest or Engage?” conference at the University. We discuss emerging academic evidence from recent, and hitherto unpublished, papers in order to provide an up-to-date perspective. We describe the challenges in excluding undesirable assets from investment portfolios and present evidence on the effectiveness of engaging with investee companies. The strategies of divestment and engagement are often employed as complements to each other and this can be advantageous. We caution that investors need to be aware of the disquieting evidence that ESG metrics differ considerably across rating services, and the choice of data provider can have a fundamental impact on the ESG credentials of institutional portfolios.