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Juniorprofessor Shuo Xia, Ph.D.

Juniorprofessor Shuo Xia, Ph.D.
Aktuelle Position

seit 1/19

Leiter der Forschungsgruppe Governance und Finanzierung

Leibniz-Institut für Wirtschaftsforschung Halle (IWH)

seit 4/19

Juniorprofessor für Volkswirtschaftslehre, insbesondere Financial Economics

Universität Leipzig

seit 9/18

Mitglied der Abteilung Finanzmärkte

Leibniz-Institut für Wirtschaftsforschung Halle (IWH)

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Forschungsschwerpunkte
  • Unternehmensführung
  • Unternehmensfinanzierung

Shuo Xia ist seit April 2019 Juniorprofessor für Volkswirtschaftslehre an der Universität Leipzig. Seit September 2018 ist er Mitglied der Abteilung Finanzmärkte. Er forscht zu Themen der Unternehmensfinanzierung und Unternehmensführung.

Shuo Xia studierte an der Beijing University of Technology, University of Essex und an der VU Amsterdam. Er promovierte an der Erasmus University Rotterdam.

Ihr Kontakt

Juniorprofessor Shuo Xia, Ph.D.
Juniorprofessor Shuo Xia, Ph.D.
Mitglied - Abteilung Finanzmärkte
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Publikationen

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The Corporate Investment Benefits of Mutual Fund Dual Holdings

Rex Wang Renjie Patrick Verwijmeren Shuo Xia

in: Journal of Financial and Quantitative Analysis, im Erscheinen

Abstract

Mutual fund families increasingly hold bonds and stocks from the same firm. We present evidence that dual ownership allows firms to increase valuable investments and refinance by issuing bonds with lower yields and fewer restrictive covenants, especially when firms face financial distress. Dual holders also prevent overinvestment by firms with entrenched managers. Overall, our results suggest that mutual fund families internalize the agency conflicts of their portfolio companies, highlighting the positive governance externalities of intra-family cooperation.

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Arbeitspapiere

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Poison Bonds

Rex Wang Renjie Shuo Xia

in: IWH Discussion Papers, Nr. 3, 2024

Abstract

This paper documents the rise of “poison bonds”, which are corporate bonds that allow bondholders to demand immediate repayment in a change-of-control event. The share of poison bonds among new issues has grown substantially in recent years, from below 20% in the 90s to over 60% since mid-2000s. This increase is predominantly driven by investment-grade issues. We provide causal evidence that the pressure to eliminate poison pills has led firms to issue poison bonds as an alternative. Our analysis suggests that this practice entrenches incumbent managers and destroys shareholder value. Holding a portfolio of firms that remove poison pills but promptly issue poison bonds results in negative abnormal returns of −7.3% per year. Our findings have important implications for the agency theory of debt: (i) more debt may not discipline the management; and (ii) even without financial distress, managerial entrenchment can lead to agency conflicts between shareholders and creditors.

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Poison Bonds

Shuo Xia Rex Wang Renjie

in: SSRN Discussion Paper, 2023

Abstract

This paper documents the rise of "poison bonds", which are corporate bonds that allow bondholders to demand immediate repayment in a change-of-control event. The share of poison bonds among new issues has grown substantially in recent years, from below 20% in the 90s to over 60% after 2005. This increase is predominantly driven by investment-grade issues. We provide causal evidence that the pressure to eliminate poison pills has led firms to issue poison bonds as an alternative. Further analyses suggest that this practice entrenches incumbent managers, coincidentally benefits bondholders, but destroys shareholder value. Holding a portfolio of firms that remove poison pills but promptly issue poison bonds results in negative abnormal returns of -7.3% per year. Our findings have important implications for understanding the agency benefits and costs of debt: (1) more debt does not necessarily discipline the management; and (2) even without financial distress, managerial entrenchment can lead to conflicts between shareholders and creditors.

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Trading away Incentives

Stefano Colonnello Giuliano Curatola Shuo Xia

in: IWH Discussion Papers, Nr. 23, 2022

Abstract

Equity pay has been the primary component of managerial compensation packages at US public firms since the early 1990s. Using a comprehensive sample of top executives from 1992-2020, we estimate to what extent they trade firm equity held in their portfolios to neutralize increments in ownership due to annual equity pay. Executives accommodate ownership increases linked to options awards. Conversely, increases in stock holdings linked to option exercises and restricted stock grants are largely neutralized through comparable sales of unrestricted shares. Variation in stock trading responses across executives hardly appears to respond to diversification motives. From a theoretical standpoint, these results challenge (i) the common, generally implicit assumption that managers cannot undo their incentive packages, (ii) the standard modeling practice of treating different equity pay items homogeneously, and (iii) the often taken for granted crucial role of diversification motives in managers’ portfolio choices.

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Themen

Finanzmärkte Unternehmensfinanzierung Innovationen Ökonometrie
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