We investigate the real effects of foreign exchange (FX) volatility on technological innovation. Using a 32-market, three-decade sample, we show that heightened FX volatility associates with significantly lower firm-level R&D expenditures, patents granted, and forward citations. The negative FX volatility-innovation relation can be attributed to precautionary savings needs and trade slowdown. The relationship is stronger for firms with financial constraints, with the use of foreign debt, and in more open economies; it is weaker for firms with derivatives hedging, with higher sales, and in countries with better financial development.
- Ph.D., Columbia University
- B.A., Tsinghua University
Dr. Zigan WANG received his Ph.D. from Columbia University and joined The University of Hong Kong as Assistant Professor of Finance in 2015. He finished his undergraduate study at Tsinghua University in 2009.
- Finance: foreign exchange, hedge fund, empirical corporate finance, banking, international finance
- Economics: environmental economics, political economics
- Accounting: tax avoidance, auditing quality, disclosure
International Finance, Foreign Exchange:
- “Media Sentiment and Currency Reversals,”
(with Ilias Filippou and Mark P. Taylor), Forthcoming at Journal of Financial and Quantitative Analysis.
- “Currency Volatility and Global Technological Innovation,”
(with Po-Hsuan Hsu, Mark P. Taylor, and Qi Xu), Journal of International Economics, Vol. 137, July 2022, Article 103607.
- “The Real Effects of Exchange Rate Risk on Corporate Investment: International Evidence,”
(with Mark P. Taylor and Qi Xu), Journal of International Money and Finance, Vol. 117, October 2021, Article 102432.
- “Technical Trading: Is it still Beating the Foreign Exchange Market?”
(with Po-Hsuan Hsu and Mark P. Taylor), Journal of International Economics, Vol. 102, September 2016, pp. 188-208.
- “The Role of Financial Constraints in Firm Investment under Pollution Abatement Regulation,”
(with Tri Vi Dang and Youan Wang), Forthcoming at Journal of Corporate Finance.
- “Estimation and Inference of Treatment Effects with L2-Boosting in High-Dimensional Settings,”
(with Jannis Kueck, Ye Luo, and Martin Spindler), Forthcoming at Journal of Econometrics.
- “Corporate Political Connections and Favorable Environmental Regulatory Enforcement,”
(with Amanda Heitz and Youan Wang), Forthcoming at Management Science.
- “Real Effects of Share Repurchases Legalization on Corporate Behaviors,”
(with Qie Ellie Yin and Luping Yu), Journal of Financial Economics, Vol. 140(1), April 2021, pp. 197-219.
- “Bank Networks and Acquisitions,”
(with Ross Levine and Chen Lin), Management Science, Vol. 66(11), November 2020, pp. 5216-5241.
- “Corporate Governance, Policies and Public Listing: The Case of Chinese State-owned Enterprises,”
in S. Boubaker and D.K Nguyen (ed.), Corporate Governance and Corporate Social Responsibility: Emerging Markets Focus, World Scientific Publishing, 2014.
We use staggered share repurchases legalization from 1985 to 2010 across the world to examine its impact on corporate behaviors. We find that share-repurchasing firms do not cut dividends as a substitution. The cash for repurchasing shares comes more from internal cash than external debt issuance, leading to reductions in capital expenditures and R&D expenses. While this strategy boosts stock prices, it results in lower long-run Tobin's Q, profitability, growth, and innovation, accompanied by lower insider ownership. Tax benefits and paying out temporary earnings are two primary reasons that firms repurchase.
Does the predeal geographic overlap of the branches of two banks affect the probability that they merge, postannouncement stock returns, and postmerger performance? We compile information on U.S. bank acquisitions from 1984 through 2016, construct several measures of network overlap, and design and implement a new identification strategy. We find that greater predeal network overlap (1) increases the likelihood that two banks merge; (2) boosts the cumulative abnormal returns of the acquirer, target, and combined banks; and (3) reduces employment, boosts revenues, reduces the number of branches, improves loan quality, and expedites executive turnover.