Mr. and Mrs. Lin Jo Yan Professor
Head of Department, Accounting
Senior Fellow, Asian Bureau of Finance and Economic Research
Fellow, Academy of International Business
Most Cited Article - Journal of Accounting and Economics, 2004; Board Characteristics, Accounting Report Integrity, and the Cost of Debt
Top 20 Most Cited Articles of all time - Journal of Finance Founding-Family Ownership and Firm Performance: Evidence from the S&P 500
Web of Science
I am a Professor at the National University of Singapore and hold the Mr. and Mrs. Lin Jo Yan Professorship, with appointments in both accounting and finance. I serve as a Senior Fellow of the Asian Bureau of Finance and Economic Research (ABFER), a Fellow at the Academy of International Business (AIB), as the Director of Business Doctoral Programs in NUS Business School, and Head of Department, Accounting.
My research interests range from founding-family ownership to the disclosure of corporate innovation, spanning the organization of intermediaries to insider trading by federal regulators. Current projects include investigating the impact of family ownership on financial misconduct, measuring unreported innovation, organizational choices in audit firms, the source of reputation in Big 4 firms, and shadow trading in corporate customers and suppliers. Over the past several years, my work has appeared in the most influential academic journals in accounting, economics, finance, law, and management.
This research has been featured in the Wall Street Journal, BusinessWeek, The Economist, Forbes, the Financial Times, the International Herald Tribune, Inc Magazine, SmartMoney, MSNBC, CNN, Bloomberg TV, and several other major newspapers and business magazines in the US, Canada, Europe, Australia and Asia.
The Accounting Review, Forthcoming
We investigate whether corporate insiders attempt to circumvent insider trading restrictions by using their private information to facilitate trading in economically-linked firms, a phenomenon we call “shadow trading.” Using measures of informed trading to proxy for shadow trading, we find increased levels of informed trading among business partners and competitors before a firm releases private information. To rule out alternative explanations, we examine two shocks to insiders’ incentives to engage in shadow trading: high-profile regulatory enforcement against conventional insider trading and staggered changes to their outside employment opportunities. Finally, we document attenuated levels of informed trading among business partners and competitors when firms prohibit shadow trading. Overall, we provide evidence that shadow trading is an undocumented and widespread mechanism that insiders use to avoid regulatory scrutiny.
The Ownership Complaint Gap: Stock vs Mutual Intermediaries
Journal of Financial and Quantitative Analysis, 2020
We document a substantial customer complaint gap between stock and mutual financial firms. To assess whether this 21% per year complaint gap stems from complaint-prone customers in stock insurers, we examine state-adjudicated complaint success. To further delineate between customer selection or treatment explanations, we exploit within insurer complaints around random claims (natural disasters) and attention shocks (media scrutiny). Further tests reveal the complaint gap widens with greater competition, near insolvency thresholds, and with more price regulation. Overall, the results are inconsistent with the hypothesis that mutual financial firms exhibit low customer satisfaction, suggesting customers find this a beneficial organizational structure.
Patents Do Not Measure Innovation Success
Critical Finance Review, 2020
We find that a company’s patent filings and citations are not good measures of R&D success or failure. Instead, our analysis reveals that patent counts reflect the firm’s mix of product and process innovation. Intuitively, competitor infringements of process innovation are difficult to detect, suggesting these innovations are better protected via trade secret than patents. Insider trading in non-patenting firms generates positive excess returns, while such activity in patenting firms yields ordinary returns. The Uniform Trade Secrets Act induced firms to switch from patenting to non-patenting, leading to lower analysts and institutional following. Financial intermediaries potentially influence the disclosure of innovation rather than research and development success (Aghion et al., 2013; Bena et al., 2017). Overall, our tests indicate that patents and citations signify the nature of innovation rather R&D success.
CEO Confidence and Unreported R&D
Management Science, 2018
We investigate whether managerial traits influence corporate decisions to provide mandatory financial disclosures. Our results indicate that confident-CEO firms are 24 percent more likely to report their R&D expenditures relative to cautious-CEO firms. Overall, our analysis suggests that the precision or reliability of mandatory disclosures systematically varies with managerial characteristics.