Dissertation
"Despite the surge of public interest in cryptocurrencies, the accounting standard setting is lagging behind. My findings have policy implications regarding the FASB’s current project on Accounting for and Disclosure of Crypto Assets."
Abstract: This study investigates whether financial analysts respond to disclosure about firms’ exposure to cryptocurrency. Applying textual analysis to 8-K filings, I find that the intensity of firms’ crypto-related disclosure is associated with more favorable target price revisions by analysts, but not near-term earnings forecast revisions. These findings imply that analysts perceive firms’ crypto exposure to have a long-term benefit on firm value, but no immediate impact on operational performance. My cross-sectional analyses further show that analyst target price revisions contain more optimism when: (1) firms’ crypto disclosure is related to corporate governance, and (2) firms’ stock returns comove more closely with the cryptocurrency market returns. Finally, I find that analysts’ target price revisions appear to enhance the stock market’s positive reaction to firms’ crypto-related disclosure around the 8-K filing dates, consistent with analysts producing useful research output that influences asset pricing.
With David Koo and Isabel Yanyan Wang
Under revision for resubmission, Management Science
"We shed light on how memory affects managers’ corporate decision-making."
Abstract: Building on theories in psychology and human memory research, this study examines whether memory retrieval affects the biases in management earnings forecasts. Specifically, we focus on the changes in the bias in management earnings forecasts when the 2008 financial crisis triggered managers’ memory retrieval related to economic recessions. Using a sample of annual earnings forecasts issued for fiscal years ending between 2002-2018, we find that CEOs who accumulate more memories of past recessions and those who observe higher unemployment at their headquarter locations during the financial crisis embedded more pessimism in their earnings forecasts. Further analyses show that the increased pessimism can take up to five years to return to the pre-crisis level, suggesting that learning may play a role in changes in forecast bias. This paper enhances our understanding of how memory affects managers’ corporate decision-making.
With Tom Cong Shang and Isabel Yanyan Wang
"Our study speaks to how sleep loss affects financial analysts in the investment banking profession."
Abstract: We examine whether sleep loss affects financial analysts’ decision-making. Anecdotal and survey evidence indicates that sleep loss is increasingly associated with declining physical and mental health in individuals, but empirical evidence on the impact of sleep loss on captial market participants is scarce because sleep loss is difficult to observe. Using a unique setting to identify a point in time when analysts are subject to sleep loss, we find that analysts exhibit a stronger herding tendency.
With James Anderson and Matthew DeAngelis
"Our study highlights how data providers decrease disclosure processing costs and facilitate information transfers among firms."
Abstract: Using Compustat as the representative data provider, we find information transfer exists around Compustat data release and such information transfer is stronger when firms are more comparable.