Jing LI
Prof. Jing LI
Accounting and Law
Deputy Area Head of Accounting and Law
Associate Professor

3917 1004

KK 1212

Academic & Professional Qualification
  • PhD: Columbia University
  • MPhil: Hong Kong University of Science and Technology
  • MS: Tsinghua University
  • BS: Tsinghua University

Dr. Jing Li’s research focuses on the role accounting information and corporate disclosures in mitigating information asymmetry and resolving agency conflicts in settings such as debt financing and corporate takeovers. In particular, she is interested in developing theoretical models and provide empirical/policy implications using a formal analytical framework. Her work appears in top academic journals including Journal of Accounting and Economics, The Accounting Review, Contemporary Accounting Research, Review of Accounting Studies.

  • Valuation Using Financial Statement Analysis (ACCT3114)
  • Fundamental Analysis and Business Valuations (MACC7008)
Selected Publications
  • “Accounting Information and Risk Shifting with Asymmetrically Informed Creditors” (with Tim Baldenius and Mingcherng Deng), Journal of Accounting and Economics, 77 (2–3), 101667.
  • “Career Concerns, Investment, and Management Forecasts” (with Tae Wook Kim and Suil Pae), The Accounting Review, 98 (2023), 337-363.
  • “Selective Disclosure, Expertise Acquisition and Price Informativeness” (with Bjorn N. Jorgensen and Nahum D. Melumad), Contemporary Accounting Research, 39 (2022), 2305-2337.
  • “Strategic Nondisclosure in Takeovers” (with Tingjun Liu and Ran Zhao), The Accounting Review, 97 (2022), 345-370.
  • “Corporate Governance Roles of Information Quality and Corporate Takeovers” (with Lin Nan and Ran Zhao), Review of Accounting Studies, 23 (2018), 1207-1240.
  • “Accounting for Banks, Capital Regulation and Risk-taking”, Journal of Banking and Finance, 74 (2017), 102-121.
  • “Accounting Conservatism and Debt Contracts: Efficient Liquidation and Covenant Renegotiation”, Contemporary Accounting Research, 30 (2013), 1082-1098.
  • “Earnings Dispersion and Aggregate Stock Returns” (with Bjorn Jorgensen and Gil Sadka), Journal of Accounting and Economics, 53 (2012), 1-20.
  • “Government Assisted Earnings Management in China” (with Xiao Chen and Chi-Wen Jevons Lee), Journal of Accounting and Public Policy, 27 (2008), 262-274.
Working Papers
  •  “Audit Retendering versus Mandatory Auditor Rotation” (With Mingcherng Deng, Dan Simunic and Nan Zhou)
  •  “Inter-Entity Bookkeeping Networks: Representations and Applications” (With Pierre Liang)
Recent Publications
Accounting information and risk shifting with asymmetrically informed creditors

This paper explores the effects of public information such as accounting earnings in a competitive lending setting with risk shifting. Debt financing creates incentives for borrowers to take on excessive risks, in particular in bad states of the world. If a privately informed inside creditor bids against outside creditors to extend a loan, public information levels the playing field, which affects the bidding and risk shifting. Nonetheless, a perfect public signal would yield the least efficient outcome: introducing some measurement noise alleviates risk shifting by subjecting outside creditors to the winner’s curse, allowing borrowers in bad states cheaper access to loans. However, for pessimistic priors about the borrower, greater public signal precision can alleviate risk shifting, at the margin. We discuss implications for financial reporting regulations along the business cycle and for creditor turnover.

Career Concerns, Investment, and Management Forecasts

A firm manager is concerned about both the firm value and the market assessments of his abilities. When investing in a project, he has private knowledge of his project-related ability that interacts with the project investment, and his general ability that produces a cash flow independent of the project cash flow. The concerns about the general (project-related) ability assessment create a signaling incentive to decrease (increase) investment. In the presence of underinvestment (overinvestment), higher-quality earnings information reduces (improves) equilibrium efficiency. When the manager issues an earnings forecast as an additional signaling device, the forecast is upwardly biased, and the equilibrium investment is smaller than that without a forecast. The latter is because the signaling incentive to decrease investment is strengthened. When the manager’s concerns about the general ability assessment are relatively large, he is better off by committing to no forecast. Novel empirical predictions about investment and earnings forecast emerge.

Selective Disclosure, Expertise Acquisition, and Price Informativeness

We examine how a firm's disclosure-audience policy affects investors' expertise acquisition and price informativeness in the market. We distinguish the investors' information advantage due to superior access from that due to superior ability to process information. We show that targeted selective disclosure to sophisticated investors may encourage greater expertise acquisition on the part of investors and lead to more informative prices than either public disclosure or untargeted selective disclosure, because the value of expertise is maximized if sophisticated investors gain exclusive information access at a relatively low cost. These results illuminate the persistence of private communications between investors and firms in the post–Regulation Fair Disclosure era and provide implications for regulators in addressing increasing concerns raised about the enforcement of Regulation Fair Disclosure.

Strategic Nondisclosure in Takeovers

We examine takeover auctions when an informed bidder has better information about the target value than a rival and target shareholders. The informed bidder’s information is either hard or soft, and only hard information can be credibly disclosed. We show that withholding information creates a winner’s curse, thereby serving as a preemption device that deters the rival’s participation. In turn, an endogenous dis- closure cost arises that induces the informed bidder to optimally withhold favorable information to minimize the acquisition price—breaking down the standard unraveling result, even if his information is always hard. Perhaps surprisingly, stronger competition from the uninformed bidder can reduce the target shareholders’ payoff and increase the payoff of the informed bidder while unambiguously improving social welfare. Moreover, “hardened” information can reduce the gains to trade, decreasing welfare but increasing shareholders’ payoff. Our results provide a cautionary note to promoting more competition and more disclosure.