Jie Yang

Title

Assistant Professor of Finance

Department

MCDONOUGH SCHOOL OF BUSINESS
Curriculum Vitae

C.V.

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Education

2010: Ph.D. Business Administration (Finance), Duke University, Durham, NC
2003: B.S. Economics, Massachussets Institute of Technology, Cambridge, MA

Academic Experience

2010-present: Assistant Professor, McDonough School of Business, Georgetown University

Honors

2015: Semi-finalist for the Best Paper Award in Corporate Finance for "Patent Litigation and Shareholder Value: The Impact of Defendant Cash Holdings" at the FMA Meeting (Orlando, FL)
2014: Semi-finalist for the Best Paper Award in Corporate Finance for "Options, Equity Risks, and the Value of Capital Structure Adjustments" at the FMA Meeting (Nashville, TN)
2013: Semi-finalist for the Best Paper Award in Corporate Finance for "Patent Litigation and Cost of Capital" at the FMA Meeting (Chicago, IL)
2010: Nominated for the Brattle Prize in Journal of Finance for "The Cost of Debt"
2008: American Finance Association Travel Grant Award
2004-2009: Doctoral Fellowship, Fuqua School of Business, Duke University

Publications

2010, "The Cost of Debt," Journal of Finance, 65, 2089-2136 (with Jules van Binsbergen and John Graham)
  • Featured in the NBER Digest and the Harvard Law School Forum on Corporate Governance and Financial Regulation
  • Nominated for the Brattle Prize (best annual corporate finance paper in JF)
2011, "An Empirical Model of Optimal Capital Structure," Journal of Applied Corporate Finance, 23, 4, 44-69 (with Jules van Binsbergen and John Graham)
  • Featured in the Harvard Law School Forum on Corporate Governance and Financial Regulation and the Dow Jones Banking Intelligence
2016, "Using Option Market Liquidity to Predict REIT Leverage Changes," Journal of Real Estate Finance and Economics, forthcoming (with Paul Borochin, John Glascock, and Ran Lu-Andrews)

    Working Papers

    "The Effects of Institutional Investor Objectives on Firm Valuation and Governance" (with Paul Borochin), revise and resubmit at the Journal of Financial Economics
    • Abstract: We find that ownership by different institutional investor types has distinct implications for future firm overvaluation, misvaluation, and governance characteristics, with firms held by dedicated institutions displaying more favorable characteristics and posting better long-term performance. Dedicated institutional investors decrease future firm misvaluation relative to fundamentals, as well as the magnitude of this misvaluation. In contrast, transient institutional investors have the opposite effect. Using SEC Regulation FD as an exogenous shock to information dissemination, we find evidence consistent with dedicated institutions having advantage in firm-specific analysis. We use characteristic matching to rule out institutional self-selection into misvalued firms. The valuation effects are primarily driven by institutional portfolio concentration while the governance effects are driven by portfolio turnover. These results implies a more nuanced relationship of institutional ownership with firm value and corporate governance.
    "Can Financially Constrained Firms Loosen Their Constraints Through Acquisitions?" (with Rohan Williamson), under review at Management Science
    • Abstract: The paper examines whether financially constrained firms are able to use acquisitions to ease their constraints. The results show that acquisitions do ease financing constraints for constrained acquirers. Relative to unconstrained acquires, financially constrained firms are more likely to use undervalued equity to fund acquisitions and to target unconstrained and more liquid firms. Using a propensity score matched sample in a difference-in-difference framework, the results show that constrained acquirers become less constrained post-acquisition and relative to matched non-acquiring firms. This improvement is more pronounced for diversifying acquisitions and constrained firms that acquire rather than issue equity and retain the proceeds. Following acquisition, constrained acquirers raise more debt and increase investments, consistent with experiencing reductions in financing constraints relative to matched non-acquirers. These improvements are not seen for unconstrained acquirers. Finally, the familiar diversification discount is non- existent for financially constrained acquirers.
    "Options, Equity Risks, and the Value of Capital Structure Adjustments" (with Paul Borochin), under review at the Journal of Financial and Quantitative Analysis
    • Abstract: We use exchange-traded options to identify risks relevant to capital structure adjustments in firms. These forward-looking market-based risk measures provide significant explanatory power in predicting net leverage changes in excess of accounting data. They matter most during contractionary periods and for growth firms. We form market-based indices that capture firms’ magnitudes of, and propensity for, net leverage increases. Firms with larger predicted leverage increases outperform firms with lower predicted increases by 3.1% to 3.9% per year in buy-and-hold abnormal returns. Finally, consistent with the leverage and distress risk puzzles, firms with lower predicted leverage increases are riskier but earn lower abnormal returns.
    "Defendant Cash Holdings in Patent Litigation: The Impact on Shareholder Value" (with David Tan)
    • Abstract: We explore the importance of cash for shaping rivalry outside the product domain by studying its implications for firms defending against patent litigation by rivals. War chests of cash can make firms more formidable targets, reducing rivals' expected gains from litigation. However, cash holdings have agency costs and carry the risk of allowing value-destroying litigation spending. We find that while defendant cash holdings reduce plaintiffs' abnormal returns from litigation, they also reduce defendants' own abnormal returns and result in greater joint loss of shareholder value for both sides. In addition, we find that defendant cash holdings are associated with cases progressing to later and more expensive stages of litigation.
    "Equity and Debt Financing Constraints"
    • Abstract: I construct a structural model in which firms maximize value conditional on being restricted from issuing equity and unsecured debt. Using GMM estimation, I find that a model with both equity and debt constraints fits better than models without constraints or with only one constraint. The estimated financing constraint measures are consistent with financing behavior and firm characteristics believed of constrained firms, with debt being the limiting constraint. Furthermore, equity constrained firms decrease R&D expenses over the next period while debt constrained firms decrease capital expenditure. Finally, I find a positive but insignificant risk premium for debt constraints amounting to 3.0% over one year that does not exist for equity constraints.
    "Changes in Institutional Ownership: Liquidity, Activism, and Firm Performance" (with Wady Haddaji)
    • Abstract: We document a negative (positive) relationship between firm performance and changes in the ownership of large (small) institutional investors. Small investors "exit" while blockholders increase their holdings following poor performance. We find evidence that large investors increase ownership following poor performance to protect the value of initial holdings and to benefit from undertaking value-enhancing interventions. We observe that poorly performing firms in which blockholders increase their ownership experience more aggressive restructuring policies than firms in which blockholders reduce their ownership. Finally, we find that firms with passive investors recover faster than firms with active investors following poor performance.
    "Network Centrality of Customers and Suppliers" (with Rongrong Zhang)
    • Abstract: We construct network centrality measures for customer and supplier industries in the U.S. economy. Consistent with Ahern, et al. (2014), we find central suppliers have higher levels of systematic risk than central customers and therefore more exposed to sectoral shocks. We posit that central suppliers have incentives to channel funds to their customers. Our empirical results are consistent with such a view. We find that the cash to cashflow sensitivity and value of cash is significantly higher for central suppliers than non-central firms, even among those financially unconstrained. In contrast, central customers have no cash to cash flow sensitivity, consistent with supplier trade credit redistribution helping to relieve customers’ financial constraints. Using the 2008 financial crisis as an exogenous shock, we document that central suppliers with high pre-crisis liquidity decrease their investment, while only customers without central suppliers are sensitive to the crisis.
    "Patent Litigation and Cost of Capital" (with David Tan)
    • Abstract: Involvement in patent litigation creates substantial direct and indirect costs for firms. We present evidence that pairs of firms involved in patent litigation are more evenly-matched in financial profiles than pairs of firms not involved in litigation. We take advantage of a novel, hand-collected data set that combines data on observed instances of patent litigation with product-level data to form dyadic plaintiffs-defendant pairs at risk of litigation in the semiconductor industry from 1984 to 2000. Product-level data for more than 200,000 semiconductor devices coupled with firm patent data allows us to construct fine-grained controls for risk of litigation between pairs of potential litigants. We consider several variables associated with a firm’s cost of capital: 1) the Whited and Wu (2006) index for financing constraints, 2) analyst coverage, and 3) institutional ownership concentration. We find evidence that, controlling for technological and product overlap, pairs of firms involved in litigation are more similar in terms of financing constraint, analyst coverage, and institutional ownership concentration than pairs of firms not involved in litigation.

    Presentations

    "Network Centrality of Customers and Suppliers" (includes presentations by coauthors)
    • 2016: Financial Management Association Meeting (scheduled), Midwest Finance Association Meeting
    "The Effects of Institutional Investor Objectives on Firm Valuation and Governance" (includes presentations by coauthors)
    • 2016: Financial Management Association Meeting (scheduled), European Financial Management Association Meeting (scheduled)
    • 2015: Georgetown University, University of Massachusetts Lowell, Office of Comptroller of the Currency
    "Options, Equity Risks, and the Value of Capital Structure Adjustments" (includes presentations by coauthors)
    • 2015: Financial Intermediation Research Society Conference, Eastern Finance Association Meeting
    • 2014: Financial Management Association Meeting, OptionMetrics Research Conference
    • 2013: Georgetown University, University of Connecticut
    "Defendant Cash Holdings in Patent Litigation: The Impact on Shareholder Value" (includes presentations by coauthors)
    • 2016: Securies and Exchange Commission
    • 2015: Financial Management Association Meeting
    • 2014: University of Washington, West Coast Research Symposium on Technology Entrepreneurship
    "Financing Constraints and Acquisitions" (includes presentations by coauthors)
    • 2016: George Mason University
    • 2015: Federal Reserve Board of Governors, Office of the Comptroller of the Currency, Securities and Exchange Commission
    • 2014: University of Connecticut, Financial Management Association Meeting, Financial Management Association Asia Meeting
    • 2013: Rutgers University, AFFI/EUROFIDAI Paris Finance Meeting
    • 2012: Georgetown University
    "Patent Litigation and Cost of Capital"
    • 2014: University of Washington
    • 2013: Financial Management Association Meeting
    • 2012: Georgetown University, Canadian Law and Economics Association Meeting
    "Changes in Institutional Ownership: Liquitiy, Activism, and Firm Performance"
    • 2013: DePaul University
    • 2012: Financial Management Association Meeting
    • 2011: Georgetown University
    "Equity and Debt Financing Constraints"
    • 2014: Federal Reserve Board of Governors
    • 2010: Financial Management Association Meeting
    • 2009: Georgetown University
    "The Cost of Debt" (includes presentations by coauthors)
    • 2009: Georgetown University
    • 2008: University of Chicago, Rice University, Indiana University, Purdue University
    • 2007: University of Pennsylvania, University of Pittsburgh, New York University, Western Finance Association Meeting, NBER Summer Institute Meeting, European Finance Association Meeting

    Service

    Refereed for Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Management Science, Review of Finance, Journal of Banking and Finance, Global Finance Journal, International Finance, International Tax and Public Finance, Managerial and Decision Economics, Quarterly Review of Economics and Finance.

    Program Committee of Western Finance Association Meeting (2013-2016), European Finance Association Meeting (2015-2016), Financial Management Association Meeting (2013-2016), Financial Management Association Asia Meeting (2014-2015), Midwest Finance Assocation Meeting (2015), Eastern Finance Association Meeting (2015).

    Discussant for American Economics Association Meetings (2008, 2011), Conference on Financial Economics & Accounting (2010), Financial Management Association Meeting (2008, 2011 – 2015, 2016 scheduled), International Paris Finance Meeting (2013), Society for Financial Studies Finance Cavalcade (2013).

    Teaching

    2009-present: Business Financial Management (Undergraduate), McDonough School of Business, Georgetown University
    2014-present: Faculty Mentor for MSB Summer Research Fellowship Program (Undergraduate), McDonough School of Business, Georgetown University