Research Papers
"Margin-Trading and Short-Selling with Asymmetric Information"
By studying China’s margin-trading and short-selling program, this paper provides evidence that allowing margin-trading and short-selling can have a negative effect on liquidity. It is because of the information asymmetry that makes uninformed investors reluctant to trade. This mechanism is verified by following evidence: First, this negative effect is more pronounced for the stocks (1) with smaller funds ownership, (2) without analyst coverage, or (3) without cross-listed shares. Second, when the asymmetric information problem is attenuated, which is the case of ETFs, this program has a positive impact on liquidity. Third, by employing the intra-day transaction data, I find that uninformed investors largely reduce their trading when this program is implemented, and the reduction is more severe for the stocks with greater information asymmetry.
"Hurting without Hitting: The Economic Cost of Political Tension" (joint with Yinghua He and Ulf Nielsson)
Political tension causing diplomatic strains rarely escalates into direct violence or war. This paper identifies the economic effects of such non-violent political tension by examining Taiwan’s sovereignty debate. Non-violent events harming the relationship with mainland China lead to an average daily drop of 200 basis points in Taiwanese stock returns. The impact is more severe on firms openly supporting the Taiwanese pro-independence party. Through a series of tests we identify this economic penalty as initiated by mainland authorities, who specifically target political opponents that are economically exposed to mainland China via either investments or exports.
Working in Progress
“Does experience impact financial performances? Evidence from the Eurozone Crisis” (joint with Nordine Abidi)
"Margin-Trading and Short-Selling with Asymmetric Information"
By studying China’s margin-trading and short-selling program, this paper provides evidence that allowing margin-trading and short-selling can have a negative effect on liquidity. It is because of the information asymmetry that makes uninformed investors reluctant to trade. This mechanism is verified by following evidence: First, this negative effect is more pronounced for the stocks (1) with smaller funds ownership, (2) without analyst coverage, or (3) without cross-listed shares. Second, when the asymmetric information problem is attenuated, which is the case of ETFs, this program has a positive impact on liquidity. Third, by employing the intra-day transaction data, I find that uninformed investors largely reduce their trading when this program is implemented, and the reduction is more severe for the stocks with greater information asymmetry.
"Hurting without Hitting: The Economic Cost of Political Tension" (joint with Yinghua He and Ulf Nielsson)
Political tension causing diplomatic strains rarely escalates into direct violence or war. This paper identifies the economic effects of such non-violent political tension by examining Taiwan’s sovereignty debate. Non-violent events harming the relationship with mainland China lead to an average daily drop of 200 basis points in Taiwanese stock returns. The impact is more severe on firms openly supporting the Taiwanese pro-independence party. Through a series of tests we identify this economic penalty as initiated by mainland authorities, who specifically target political opponents that are economically exposed to mainland China via either investments or exports.
Working in Progress
“Does experience impact financial performances? Evidence from the Eurozone Crisis” (joint with Nordine Abidi)
