Professor Shuo Xia, PhD

Professor Shuo Xia, PhD
Current Position

since 1/19

Head of the Research Group Matching and Incentives in Financial Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 4/19

Assistant Professor of Economics, esp. Financial Economics

Leipzig University

since 9/18

Member of the Department Financial Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

Research Interests

  • corporate governance
  • corporate finance

Shuo Xia is Assistant Professor of Economics at Leipzig University since April 2019 and a member of the Department of Financial Markets since September 2018. His research focuses on corporate finance and corporate governance.

Shuo Xia earned his bachelor's degree from Beijing University of Technology and a master's degree from University of Essex and VU Amsterdam. He received his PhD from Erasmus University Rotterdam.

Your contact

Professor Shuo Xia, PhD
Professor Shuo Xia, PhD
Mitglied - Department Financial Markets
Send Message +49 345 7753-875 Personal page

Publications

Working Papers

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Trading away Incentives

Stefano Colonnello Giuliano Curatola Shuo Xia

in: IWH Discussion Papers, No. 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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Corporate Governance Benefits of Mutual Fund Cooperation

Rex Wang Renji Patrick Verwijmeren Shuo Xia

in: IWH Discussion Papers, No. 21, 2022

Abstract

Mutual fund families increasingly hold bonds and stocks from the same firm. We study the implications of such dual holdings for corporate governance and firm decision-making. We present evidence that dual ownership allows financially distressed firms to increase investments and to refinance by issuing bonds with lower yields and fewer restrictive covenants. As such, dual ownership reduces shareholder-creditor conflicts, especially when families encourage cooperation among their managers. Overall, our results suggest that mutual fund families internalize the shareholder-creditor agency conflicts of their portfolio companies, highlighting the positive governance externalities of intra-family cooperation.

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Lame-Duck CEOs

Marc Gabarro Sebastian Gryglewicz Shuo Xia

in: SSRN Working Papers, 2018

Abstract

We examine the relationship between protracted CEO successions and stock returns. In protracted successions, an incumbent CEO announces his or her resignation without a known successor, so the incumbent CEO becomes a “lame duck.” We find that 31% of CEO successions from 2005 to 2014 in the S&P 1500 are protracted, during which the incumbent CEO is a lame duck for an average period of about 6 months. During the reign of lame duck CEOs, firms generate an annual four-factor alpha of 11% and exhibit significant positive earnings surprises. Investors’ under-reaction to no news on new CEO information and underestimation of the positive effects of the tournament among the CEO candidates drive our results.

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