Ying Sophie Huang

Monetary Policy and Corporate Investment: Evidence from Chinese Micro Data

This paper investigates how a firms characteristics restrict the influence of monetary policy changes on its investment behavior. Focusing on Chinas listed companies for a sample period from the first quarter of 2002 to the first quarter of 2011, we find that quantity‐oriented and price‐based monetary policies have heterogeneous impacts on corporate investment behavior, but the influence of monetary policies is constrained by the liquidity, inventory, size and asset–liability ratio of a firm. Firms with higher liquidity, lower inventory level and lower asset–liability ratios are less sensitive to the impact from two kinds of monetary policies. The larger the size of the firm, the less it is subject to influence from quantity‐oriented monetary policy; it responds more to price‐based monetary policy. The policy implication is that the monetary authorities should pay attention to the importance of policy‐making based on the monetary demand of microeconomic entities.

Are college chief executives paid like corporate CEOs or bureaucrats

We study compensation of college chief executives from 1997 to 2004. Although presidential salaries have acquired the attention of the media, Congress, and the Internal Revenue Service (IRS) in recent years, they are much below those of corporate CEOs. Compared with CEOs in corporations with comparable sizes, college chief executives earn on average approximately one-third of the compensation of their corporate counterparts. However, CEO compensation is more volatile than that of college chief executives. Our results show that private college presidential salaries are consistent with the prediction of job complexity and institutional reputation hypotheses. Presidential compensations of public research universities, on the other hand, are more consistent with the prediction of job complexity hypothesis only. Hence, our findings do not support the prediction of bureaucrat hypothesis for both private and public institutions.

Which Types of Traders and Orders Profit from Futures Market Trading

The Taiwan futures exchange, which trades contracts on the TAIEX stock index, collects extensive data on each trade, including the particular type of trader (a proprietary futures trading firm, a domestic institutional investor, a foreign institutional investor, or an individual) along with the price, quantity, trade time, and whether it was a market order or limit order. The authors investigate the data for trading from 2006–2008. They categorize limit orders as aggressive (limit price above the current quote midpoint) or passive. Tests on overall profitability show that individual traders lose money to the other groups, which are all profitable. Institutional traders use more aggressive limit and market orders than passive orders, and the resulting trades are more profitable than those initiated by passive limit orders. They find greater use of aggressive order types at the beginning of the trading day by institutional traders, which is consistent with theories of optimal trading strategy for informed investors.

Simultaneous Estimation of Executive Compensation and Firm Performance in the Banking Industry

This paper examines whether executive compensation enhances shareholders claims on earnings and valuation in the banking industry. We decompose executive compensation into bonus, salary, and stock option components and find that compensation contracts in the banking industry are generally designed to be performance sensitive when firm performance is an accounting-based measure. Although compensation is ROE sensitive, executive compensation enhances both ROE and stock returns when firm performance measures are modeled endogenously. This conclusion is thus more in line with the disequilibrium hypothesis that executive compensation reduces agency costs and enhances firm value. In addition, it is noted that each individual compensation component does not have the same effect on firm value. Generally speaking, in the short run the weakest connection between compensation and firm performance is detected for salary, while the strongest for bonus. Stock option, however, is the only component that predicts next periods stock return. The finding is consistent with the view that stock option is designed to be long-term incentive compensation.