Yinghua Li

• Professor (Associate) at Arizona State University

Using a natural experiment (Regulation SHO), we show that short selling pressure and consequent stock price behavior have a causal effect on managers’ voluntary disclosure choices. Specifically, we find that managers respond to a positive exogenous shock to short selling pressure and price sensitivity to bad news by reducing the precision of bad ne...

This paper examines whether and how private securities litigation led by institutional and individual investors elicits changes in subsequent stock trading by corporate insiders. Using a large litigation sample from 1996 to 2009, we find significant decreases in volumes of insider stock sales following shareholder litigation when institutional inve...

This paper examines the impact of hedge fund activism on corporate tax avoidance. We find that, relative to matched control firms, businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention. Moreover, findings suggest that the incr...

This paper investigates how individual managers’ expertise and functional roles within a firm determine their specific forms of opportunistic behaviors. Specifically, we contrast corporate decisions influenced by the trading incentives of CEOs versus CFOs. We find that only CEO prescheduled stock sales lead to voluntary releases of good news and th...

We examine the impact of mandatory IFRS adoption on firm-level “crash risk,” defined as the frequency of extreme negative stock returns. An important feature of our study is that we separately analyze industrial firms and firms in finance-related industries. This is important because IFRS adoption is likely to affect industrial firms through differ...

Using a large sample of U.S. firms for the period 1993-2009, we provide evidence that the sensitivity of a chief financial officer's (CFO) option portfolio value to stock price is significantly and positively related to the firm's future stock price crash risk. In contrast, we find only weak evidence of the positive impact of chief executive office...

This paper examines the impact of hedge fund activism on corporate tax avoidance. We find that relative to matched control firms, businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention. Moreover, findings suggest that the incre...

We examine the impact of corporate tax avoidance on the price and non-price terms of bank loans. We predict and provide evidence that banks charge lower loan spreads and impose fewer covenant restrictions when firms exhibit greater tax avoidance. These favorable effects are more pronounced for borrowers with higher credit risk and better governance...

Using a large sample of U.S. firms for the period 1995-2008, we provide strong and robust evidence that corporate tax avoidance is positively associated with firm-specific stock price crash risk. This finding is consistent with the following view: Tax avoidance facilitates managerial rent extraction and bad news hoarding activities for extended per...

Under the premises that hedge fund activists are capable of eliciting value-enhancing corporate changes and conservatism facilitates shareholder monitoring and improves firm value, we examine whether hedge fund intervention changes the level of conservatism in target firms' financial reporting. We find that target firms exhibit an increase in conse...

This paper investigates the effectiveness of using securities class action lawsuits in monitoring defendant firms by institutional lead plaintiffs from two aspects: (1) immediate litigation outcomes, including the probability of surviving the motion to dismiss and the settlement amount, and (2) subsequent governance improvement such as changes in b...

Using a large sample of loans initiated by firms targeted by hedge fund activists during 1994-2008, we show that hedge fund activism has significant impacts on firms’ bank loan contracts. After the targeting announcement, and relative to firms that are not targeted, the targeted firms pay significantly higher spreads, are more likely to be required...

This paper uses the residual income valuation technique outlined in Feltham and Ohlson 1996 to examine the relation between stock valuations and accounting numbers for a prototypical banking firm. Prior work of this nature typically assumes a manufacturing setting. This paper contributes to the prior research by clarifying how the approach can be e...

We examine changes in analysts’ monitoring incentives and effectiveness as they progress along their career paths. We find that analysts are less likely to be elected all-stars in the annual Institutional Investor elections when the firms they covered in the year prior to the election have high absolute abnormal accruals. Consistent with the hypoth...

This paper develops a model to analyze the impact of shareholder litigation on managers' voluntary disclosure strategies in equity offerings. The major findings are as follows. First, under different economic parameters, the entrepreneur has two possible equilibrium disclosure strategies: full and partial disclosure. Of particular interest is the l...

We ask whether the history of interactions between a firm and its analysts affects management's quarterly earnings forecast decision and analysts' subsequent earnings estimate revisions. We show that the history of their interactions not only reflects their individual incentives but is also used to form expectations about current decisions. Specifi...