Publications:
“The Effect of Major Customer Concentration on Firm Profitability: Competitive or Collaborative?”, with Kai Wai Hui and P. Eric Yeung, Review of Accounting Studies 24 (2019): 189-229
- Conferences: 2016 MIT Asia Conference, 2016 AAA FARS Midyear Meeting
- Abstract: We test two potential hypotheses regarding the effects of major customer concentration on firm profitability. Under the collaboration hypothesis, both the supplier firm and its major customers obtain benefits. Under the competition hypothesis, the major customers benefit at the expense of the supplier firm. We document that major customer concentration is negatively associated with the supplier firm’s profitability but positively associated with the major customers’ performance. We demonstrate that these effects weaken as the supplier’s power grows over its relationship with major customers, supporting the competition hypothesis. We carefully reconcile our results with prior findings that focus only on the supplier firm’s profitability by identifying their research design and interpretation problems. We obtain similar inferences when using alternative customer concentration measures as well as in a setting of major customers’ horizontal mergers.
“Advertising Rivalry and Discretionary Disclosure”, Journal of Accounting and Economics, 77 (2024): 101611
- Conferences: 2019 MIT Asia Conference in Accounting (Best Paper Award), 2019 AAA FARS Midyear Meeting, 2018 AAA Annual Meeting
- Abstract: Advertising is a critical competitive tool that shapes interactions among firms in the product market. Using third-party tracked data on advertising outlet costs, I find that a nontrivial portion of public firms, even those with intense advertising activities, do not disclose advertising expenses in their financial statements, indicating significant disclosure discretion. I further use product category-level advertising data to develop a firm-specific measure of advertising rivalry. I predict and find that advertising rivalry is negatively associated with the likelihood of disclosing advertising expenses. This negative association is more pronounced when firms advertise on less trackable media outlets or have more mature products. These findings suggest that firms consider their advertising expenses proprietary and that concerns about advertising competition discourage the disclosure of advertising expenses.
“Does the Risk Aversion of Accountants Matter? Female Rank-and-File Accounting Employees and Internal Control Quality”, with Ben Lourie and Alex Nekrasov, Journal of Accounting and Public Policy, 45 (2024): 107194
- Conferences: 2020 AAA Annual Meeting, 2021 Tel Aviv Accounting Conference, 2021 UCI/UCLA/USC/UCSD/UCR Joint Conference
- Abstract: Using novel data on corporate accounting employees, we find that the risk aversion of rank-and-file accounting employees, proxied by the proportion of female accountants, is negatively associated with the likelihood of internal control weaknesses. The results are incremental to controlling for other accounting employee characteristics, such as experience and quality, which are also associated with fewer internal control weaknesses. In contrast, female non-accounting employees explain operating risk and not internal control risk. We mitigate endogeneity concerns by using an entropy balanced sample and an instrumental variable approach that exploits variation in the external supply of female accountants. Our study is among the first to provide large-sample archival evidence that characteristics of accounting employees matter to financial reporting and how these effects differ from non-accounting employees.
“Voluntary Disclosure of Workforce Gender Diversity”, with Ben Lourie, Alex Nekrasov, and Il Sun Yoo, Journal of Financial Reporting, 2024: 1-25
- Conferences: 2022 AAA Western Region Meeting, 2022 AAA Annual Meeting
- Abstract: We examine managerial incentives to disclose the gender diversity of a firm’s workforce. We exploit information from employees’ online profiles to infer the gender diversity of nondisclosing firms. Within industry, we find that firms are more likely to disclose gender diversity when women comprise a higher proportion of their workforce, consistent with managerial incentives to disclose favorable information. However, disclosure is more prevalent in industries with a lower proportion of female employees, consistent with a poor gender diversity environment making a firm’s gender diversity appear relatively more favorable. Regarding the potential benefits of disclosure, disclosing firms enjoy more favorable media coverage of the firm’s diversity and attract a larger number of gender-lens ESG funds. Disclosing firms with a higher proportion of female employees enjoy greater benefits. Overall, our study broadens our understanding of the evolving corporate disclosure landscape by providing evidence on firms’ incentives to disclose workforce gender diversity.
“Too Much of a Good Thing? Administrative Support Staff and Firm Performance”, with Ben Lourie, Alex Nekrasov, and Tonni Xia, Journal of Accounting, Auditing and Finance, forthcoming
- Conferences: 2021 AAA Annual Meeting, 2022 Hawaii Accounting Research Conference
- Abstract: Administrative support staff aid firms in managing and motivating employees. However, our understanding of their role is limited. Using unique data from employee profiles, we find that administrative intensity, defined as the proportion of administrative support employees, is negatively associated with future firm performance. This negative association disappears when administrative intensity is low, suggesting a certain level of administrative intensity may be beneficial. Further analysis shows that higher administrative intensity is associated with better employee relationships: lower turnover and higher job satisfaction. However, administrative intensity comes at the cost of lower innovation quality and quantity. Finally, we find that firms with higher administrative intensity experience lower future stock returns, suggesting investors do not fully use this information. Overall, our findings reveal the trade-offs of administrative support: while firms with higher administrative intensity enjoy better relationships with employees, these firms also exhibit worse innovation, resulting in overall poorer financial performance.