Prof. Dr. Shushu Liao

Abstract

This article examines the relationship between employee demographic diversity and firm performance measured by future stock returns for a large sample of US public companies. We use novel demographic data extracted from employees' online profiles and resumes and focus on three key aspects of employee demographic diversity: age, gender, and ethnicity. We find no evidence supportive of an outperformance associated with greater employee-diverse companies, neither using portfolio-sorting approaches nor cross-sectional and panel regressions. We also find no significant associations between employee demographic diversity and ROE, gross profit, and labor productivity.

Abstract

We investigate the association between the chief executive officers’ (CEOs’) marital status and their tendency to profit from insider trading. We argue that marriage can constrain CEOs’ opportunistic behaviour, which could increase litigation risk and show that married CEOs earn lower future abnormal profits compared to unmarried CEOs. We also find that married CEOs are less likely to engage in opportunistic trades and earn lower insider trading profits among firms with weaker corporate governance and those with higher information asymmetry. Our empirical results remain robust after accounting for several endogeneity tests.

Abstract

It is well documented that since at least the 1970s investment-cash flow (I-CF) sensitivity has been decreasing over time to disappear almost completely by the late 2000s. Based on a neoclassical investment model with costly external financing, we show that this pattern can be explained by the gradual increase of capital adjustment costs, attributable to the accumulation of knowledge capital. The result is robust to a variety of approaches, including Euler equation estimation and the simulated method of moments. More generally, our findings demonstrate that I-CF sensitivity should only be interpreted as a joint measure of financial and real frictions.

Abstract

The recent financial crisis was associated with a large and prolonged deterioration of the credit supply. I build and calibrate a structural model to explore the impact of credit-supply shocks on firm behavior in the context of labor market frictions. I discover that (i) a negative shock to the credit supply can lead to a protracted depression in business activities when firms have a steady level of productivity (demand) and that (ii) a reduction of labor adjustment costs can improve investment and mitigate the negative impact of credit-supply shocks, especially for firms with a high level of productivity. I also empirically corroborate that a lower labor unionization rate can mitigate the negative impact of supply shocks on high-demand firms during a crisis.

Abstract

We examine the effect of CEO extraversion on corporate performance during the Global Financial Crisis (GFC). Contrary to the expectation that extraverted CEOs should shield firms better from GFC adversities, we document that the extraversion characteristic of CEOs places a significant, though negative, effect on corporate performance during the financial crisis. Our findings are robust to controlling for other CEO personality traits. We also perform a battery of robustness tests and validate the underperformance of firms with extraverted CEOs during the GFC using stock returns and measures of operating performance. We argue that because extraverted CEOs are associated with heightened firm risk profile, this can hurt firms when the market disciplines excessive risk-taking during the crisis.