Publications

Green Image Management in Supply Chains: Strategic Disclosure of Corporate Suppliers
with Yilin Shi, Jing Wu, and Yu Zhang. Accepted at Journal of Accounting and Economics

Abstract: This paper examines how firms manage their disclosure of customer-supplier relationships to create a favorable green image in their supply chain. Our study finds strong evidence that firms strategically disclose relationships with environmentally responsible ("good") suppliers while withholding relationships with "bad" suppliers, ceteris paribus. This strategic disclosure is particularly pronounced for firms with a worse ESG rating, a greater concern for their brand image, and a higher level of institutional ownership. Additionally, it tends to increase as public awareness of climate change grows and decreases as regulations on environmental information transparency strengthen. Furthermore, we find that firms engaging in strategic disclosure of "green" suppliers experience higher future stock returns and asset turnover, indicating that investors and consumers may not fully understand the implications of such disclosure.

The Dog that Didn't Bark: Limited Price Efficiency and Strategic Nondisclosure
​with Frank Zhou. March, 2020,  Journal of Accounting Research

Abstract: The theory posits that investors can rationally infer the implications of strategic nondisclosure for firm value, pressuring managers to voluntarily disclose information. This study documents that the lack of an earnings guidance predicts an abnormal return of -41 basis points around the subsequent quarterly earnings announcement, suggesting that investors do not fully incorporate the implications of nonguidance. Further analysis shows that limitations in price efficiency, driven by investors' limited attention and short-selling constraints, explain the mispricing of nonguidance. Consistent with this mispricing lowering the capital market pressure for disclosure, we find that limited attention and short-selling constraints are associated with a lower likelihood of issuing guidance. 

The Black-White Gap in Non-Cognitive Skills among Elementary School Children
​with Todd Elder. January, 2021, American Economic Journal: Applied Economics 

Abstract:  Using data from two Early Childhood Longitudinal Study cohorts, we find large black-white gaps in teacher-reported measures of non-cognitive skills. We show that these measures likely understate true racial disparities in non-cognitive skills because of systematic differences across schools in what teacher reports represent. Correcting for the resulting bias nearly doubles the size of the estimated gaps, to roughly the same magnitude as analogous gaps in achievement test scores. We then use the British Cohort Study of 1970 to provide suggestive evidence that non-cognitive skills account for large black-white disparities in adult outcomes, including arrest rates and educational attainment.

The Effects of Divorce Laws on Labor Supply: A Reconsideration and New Results 
October, 2018, Economics Bulletin​   

Abstract:  Using data from two Early Childhood Longitudinal Study cohorts, we find large black-white gaps in teacher-reported measures of non-cognitive skills. We show that these measures likely understate true racial disparities in non-cognitive skills because of systematic differences across schools in what teacher reports represent. Correcting for the resulting bias nearly doubles the size of the estimated gaps, to roughly the same magnitude as analogous gaps in achievement test scores. We then use the British Cohort Study of 1970 to provide suggestive evidence that non-cognitive skills account for large black-white disparities in adult outcomes, including arrest rates and educational attainment.

Working Papers

Corporate Income Tax Rates and Household Consumption
with Eric Allen​, Henry Friedman, and Yiyuan Wang. R&R at Journal of Accounting and Economics
Media Coverage: UCLA Anderson Review

Abstract: Household consumption drives economic activity and is a key component of social welfare. Although corporate income taxes (CIT) are not levied directly on households, they can affect household consumption through various incidence channels. To assess these consequences, we estimate the aggregate effects of CIT rate changes on household consumption. We find that a one–percentage-point increase in the CIT rate is associated with a 0.5% decline in household consumption, and that tax decreases have no significant effect. The changes in consumption are more pronounced among households headed by less-educated parents, those belonging to ethnic minorities, and households with lower liquidity. Further, we find increases in consumption inequality after rate increases, driven by spending on relatively discretionary non-food and high-price goods. Finally, we show that increases in CIT rates are linked to lower net in-migration and reduced total consumption at the state level. Our findings contribute to the literature on the economic consequences of corporate taxation and show that a government policy not directly targeted at households can still have significant effects on their consumption behavior.
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Within-Firm Information Inequality and Employee Wage Disparity
with Philip Berger, Yifan Jia, and Haoran Zhu

Abstract: We investigate the relation between within-firm information inequality and employee wage inequality. We use the distance between establishments and headquarters to proxy for the level of within-firm employee information disadvantage. Employee salary data from Glassdoor are used to establish that, ceteris paribus, greater distances between establishments and headquarters lead to lower employee wages. The finding is especially evident in private firms, and firms with limited transparency, large earnings volatility, or more establishments. The effect becomes less salient when employee bargaining power is low, pay transparency is high, and the establishment size increases. The pattern remains consistent when using only non-headquarters establishments. We use new airline route introductions as a shock and find that reducing travel time to headquarters increases employee wages. Furthermore, we demonstrate that employees working farther from the headquarters exhibit less accurate predictions of employer performance, validating distance as a proxy of within-firm information inequality. In summary, our research illuminates within-firm information opaqueness as a significant contributor to income inequality and shows that within-firm information transparency can alleviate these disparities.

Understanding Reputation Damage to Firm Culture: Insights from Employee Perceptions Post Financial Misconduct
with Siew Hong Teoh and Christos Makridis
Media Coverage: NYU School of Law, PCCE; Duke The FinReg Blog; Columbia Law School's Blue Sky Blog
Conferences: The First CUHK-RCFS Conference on Corporate Finance and Financial Intermediation, 2019;
30th Annual Conference on Financial Economics & Accounting, 2019
​Financial Accounting and Reporting Section Midyear Meeting, 2020

Abstract: We investigate changes in employee perceptions of their firm and managers following the revelation of financial misconduct using employee ratings and comments on Glassdoor.com. We find that employee overall ratings of their company decline by 0.23 standard deviation, and ratings of culture, senior leadership, career opportunity, work-life balance, and employee recommendations also decline, ranging from 0.09 to 0.28 standard deviation. Ratings decline are more pronounced for employees with longer tenure, middle-aged, and full-time status, and for announcements receiving high media attention. Using a machine learning method to analyze employee comments, we find that employees provide fewer positive comments and more negative ones on the topic of firm culture. Employees also mention their intention to leave more frequently in their negative comments and general feedback comments. Collectively, the evidence suggests more negative employee perceptions about their firm following financial misconduct announcements, consistent with reputation damage to the firm culture. These negative sentiments suggest higher labor retention costs and lower productivity after a financial misconduct incident.

Financial Reporting Quality and International Trade
UCLA Dissertation Year Fellowship
Conferences: DSFI, Western Region AAA Meeting, 2020 (Best Student Paper Award);  The Trans-Atlantic Doctoral Conference, 2021
Workshop: The University of Utah; Dartmouth College; UPenn Wharton; London Business School; University of Minnesota; The Chinese University of Hong Kong; The University of Hong Kong; The Chinese University of Hong Kong (Shen Zhen)​

Abstract: This paper examines the effects of financial reporting quality on exports and imports. I begin by using survey data from executives to measure accounting quality and conduct country-sector-level analyses. I find that a one standard deviation increase in financial reporting quality in a country is associated with increases in manufacturing exports and imports of 3.6 percent and 4.5 percent, respectively. I then exploit a reporting regulation change in China and use administrative firm-level international trade data to conduct differences-in-differences and triple-difference analyses. These results show that treated firms export 15.3 percent more after the financial reporting reform. They also export to more countries and export more types of goods after the reform. Next, I provide evidence for potential mechanisms for these effects; specifically, improvements in financial reporting quality (i) facilitate communication among people of different cultures, (ii) decrease information asymmetry between trade partners, and (iii) help firms raise external capital. This paper extends understanding of the real economic effects of financial disclosure and provides a potential link between information transparency and global economic growth.

The Effects of Exchange Rate Movements on Publicly Traded US Corporations
with Ivo Welch

Abstract: Previous literature struggled to find strong effects of exchange-rate exposure on US stock returns. Our paper brings firm-specific export data to reinvestigate this exchange-rate puzzle and finds surprisingly large exchange-rate effects on exports, sales, profits, and stock returns. These were not offset by (financial or operational) hedging, and they seem to have not only been due to export changes but also due to changes in the domestic competitive environment. The effects increased over time and were stronger for larger and more export-oriented firms.​

​Beyond the Scandal: Financial Misconduct and Improvements in Product Quality
with Zitong Zeng

Abstract: This study investigates how financial misconduct announcements affect product quality. Using consumer review data from a major online retail platform and difference-indifferences analyses, we find that product quality significantly improves for firms involved in fraudulent activities after such activities are exposed. The effect is more pronounced when fraud firms receive greater media attention and for products with higher sales or prices. We identify two primary reasons for these quality improvements: (1) firms engage in reputation repair efforts to rebuild consumer trust after declines in sales and public perception, and (2) firms streamline product offerings, thereby improving investment efficiency. Our findings reveal an important, socially beneficial, yet unintended consequence of fraud announcements and provide insight into the economic mechanisms driving these changes in product markets.​

​When Disaster Strikes: How Climate Events Influence Employment Preferences
with Allen Huang, Yiyuan Wang, and Yue Zheng

Abstract: This paper examines how experiences with climate disasters shape workers’ employment preferences. We find that, in disaster-affected areas, firms with worse environmental performance fill vacancies more slowly and hire lower quality employees than better environmentally performing firms, compared to unaffected areas. The job vacancy effect strengthens where belief in climate change is greater. After disasters, local employees at environmentally worse-performing firms leave more negative employer reviews about environmental issues and are more likely to move to greener employers, relative to other-location employees. Overall, our evidence suggests that climate disasters increase workers’ climate awareness and their preference for environmentally responsible employers.