Research | weili

Publications or Accepted Papers

CEO Hometown Preference in Corporate Environmental Policies, with Qiping Xu and Qifei Zhu

Management Science, accepted

Discontinuous Distribution of Test Statistics Around Significance Thresholds in Empirical Accounting Studies, with Xin Chang (Simba) and Huasheng Gao

Journal of Accounting Research, accepted

Investor-paid Credit Ratings and Managerial Information Disclosure

Management Science, forthcoming

Do Political Connections Affect Stock Price Crash Risk? Firm-level Evidence from China, with Lihong Wang

Review of Quantitative Finance and Accounting, April 2017, 48(3)

Working Papers

Social Connectedness and Information Acquisition: Evidence from EDGAR Searches, with Boluo Liu and Yuan Zhang

Joint Accounting Research Workshop (2023)

Exploiting the Social Connectedness Index constructed based on Facebook friendship links, we document that social connectedness is positively associated with investors’ acquisition of public information as captured by their downloading behaviour on EDGAR. Using M&A announcements as a shock to the extent of potential private communication through social networks, we find that our baseline result intensifies in the weeks leading to the public M&A announcements, consistent with private communication via the social network driving our results. Additional cross-sectional analyses show that our results are stronger when there is a potentially greater scope for complementarity between private communication and public information acquisition. We also find that social connectedness mitigates the local bias and affects other dimensions of investor activities. Overall, we highlight the important roles that social connectedness plays in investors’ information acquisition about firms both in local proximity and along the social network.

The Opioid Epidemic and Local Public Financing: Evidence from Municipal Bonds, with Qifei Zhu

Midwest Finance Association Annual Meeting* (2020)

This paper examines the impact of the opioid epidemic on the financing costs of local governments. We find that a higher county-level drug overdose death rate raises offering yield spreads for local municipal bond issuers, while lowering their debt capacity. A causal interpretation is suggested by a 2SLS approach, using the distances between counties and their closest opioid manufacturer as instruments. Additionally, counties in states that introduced must-access prescription drug monitoring programs (PDMP) experienced a reduction in borrowing costs afterwards. The opioid crisis hurts issuer creditworthiness by reducing future governmental revenues and increasing police and criminal justice expenditures.

Local Gambling Preference and Corporate Cash Holding

CICF (2017, Hangzhou); FMA Asia/Pacific (2018, Hong Kong)

This paper studies the relation between local attitudes towards gambling and corporate liquidity. I find that firms exposed to stronger gambling preference hold significantly more cash, because cash enables them to take more risk while staying away from financial distress. Furthermore, I show that gambling-prone firms hold more cash only when they are financially constrained, and these firms also have higher marginal value of cash holding. Corporate headquarter relocation confirms the causal impact of gambling preference on cash holding. Taken together, these findings suggest that greater cash holding in gambling-prone firms is a value-increasing policy due to their strong risk-taking incentive.

(* indicates presentation by co-author)