Working Papers-Peking University HSBC Business School(PHBS)

Let the Good Times Roll: Subjective Expectations and Asset Management

Using a unique regulation implemented in a developing financial market – the mandatory disclosure of macroeconomic and security-market outlooks required of all Chinese mutual funds – we construct direct measures of portfolio managers’ subjective expectations and their influence on asset allocation decisions. Despite their sophisticated skills, high-powered incentives, and access to extensive information,...

Francesco D' Acunto, Baixiao Liu, Linlin Ma, Yizou Wu*

Working Paper | No. 20250104 |

Keywords: Keywords: subjective expectations, belief formation, extrapolation, mutual funds, asset allocation

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Competition, Cannibalization, and New Product Introductions: Evidence from the Pharmaceutical Industry

When there is uncertainty about a new product’s net value, firms treat the timing of the product launch as a real option. When the potential cannibalization costs imposed on existing products are important, the timing decisions are sensitive to competitors’ actions, as they affect these costs. In the pharmaceutical industry, we show that firms often delay new launches until generic entry threats ...

Yuanfang Chu, Sudipto Dasgupta, Fangyuan Ma

Working Paper | No. 20250103 |

Keywords: Keywords: innovation, product launch, competition, creative destruction, real option

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Fake Entry

We show the financial interests of a generic-drug manufacturer's largest shareholders in a branded competitor predict the generic's likelihood of being the first to challenge a drug patent. Conditional on a challenge, these common-ownership links predict settlements and delayed generic entry in exchange for payments to the generic. The stock price reactions are positive for the brand but negative for ...

Martin Schmalz, Jin Xie

Working Paper | No. 20250102 |

Keywords: Keywords: ownership, corporate objective, corporate governance

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Nominal Rigidities, Earnings Manipulation, and Securities Regulation

How does output-price stickiness affect managers’ incentive to manipulate earnings and their firms' financing costs? We show firms with sticky-output prices experience more negative returns during tight windows around the Enron scandal and are more likely to misreport earnings when securities regulation is lenient, and their misreporting drops significantly after regulation becomes stringent. Sticky-...

Erica Xuenan Li, Pengfei Wang, Jin Xie, Ji Zhang

Working Paper | No. 20250101 |

Keywords: Keywords: nominal rigidities, earnings manipulation, agency cost, Sarbanes-Oxley Act, credit market

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Multinational Expansion in Time and Space

This paper studies the expansion patterns of multinational enterprises (MNEs) in time and space Informed by a se

Stefania Garetto, Xiao Ma, Lindsay Oldenski, Natalia Ramondoy

Working Paper | No. 20241204 |

Keywords: Multinational firms, foreign direct investment, firm dynamics, sunk costs

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Asylum Assignment and Burden-Sharing

We analyze the problem of matching asylum seekers to member states, incorporating wait times, preferences of asylu

Gian Caspari, Manshu Khanna

Working Paper | No. 20241203 |

Keywords: matching theory, market design, stability, asylum assignment

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Information Design for Social Learning on a Recommendation Platform

A recommendation platform sequentially collects information about a new product revealed from past consumer trials

Chen Lyu*

Working Paper | No. 20241201 |

Keywords: information design, social learning, recommendation platform, Lagrangian duality

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No Sparsity in Asset Pricing: Evidence from a Generic Statistical Test

We present a novel test to determine sparsity in characteristic-based factor models Applying the test to industry

Junnan He, Lingxiao Zhao, Guofu Zhou

Working Paper | No. 20241202 |

Keywords: factor models, characteristic-based factors, sparsity, test

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Monetary Policy in Open Economies with Production Networks

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Keywords: ESG, Mutual fund family, Spillover effect, Fund flows, Affection-based judgement, Fund proliferatio

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Transcontinental Railways and Hinterland Development

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Keywords: ESG, Mutual fund family, Spillover effect, Fund flows, Affection-based judgement, Fund proliferatio

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