Lily Xiaoli Qiu
Assistant Professor of Economics
Box B, Brown University
Providence, RI 02912

Curriculum Vitae

Research

  • Selection or Influence? Institutional Investors and Corporate Acquisitions
    • This paper shows that the presence of large public pension fund shareholders reduces ex ante bad acquisitions. When firms with large public pension fund presence do acquire other firms, they perform relatively better in the long-run. Other institutional investors have either the opposite effect or no effect. Identifying the sources of exogeneous variation in institutional ownership is crucial to establish the direction of causality between institutional ownership and observed corporate merger and acquisition decisions. This paper introduces two new instrumental variables, one of which borrows the concept of a “Bartik” instrument from the labor economics literature.
  • Selection or Influence? Institutional Investors and Acquisition Targets(with Hong Wan)
  • Managerial Reputation Concerns, Outside Monitoring, and Investment Efficiency
    • This paper argues that an external monitor can be less effective when there is uncertainty regarding the quality of the management and the business environment. In a two-period model, and outside monitor, who initially does not know managerial quality, can have the manger fired. The manger makes investment decisions based on noisy but informative private information, and if she is the empire-building type, derives private benefits from over-investment. Uncertainty imposes extra costs on the monitor, and leads to equilibrium in which the risk-neutral monitor gives up monitoring ex ante. The model highlights the limits of external monitoring, and suggests that outside monitoring cannot fully substitute for internal monitoring by the board. Some implications of this model are confirmed in empirical tests.
  • Growh to Value: A Difficult Journey for IPOs and Concentrated Industries(with Gerard Hoberg)
    • We find strong evidence that the concentration premium documented by Hou and Robinson (2005) is directly tied to information contained in the market for initial public offerings. Industry-wide return predictability and unexpected real cashflows only exist (and are in fact much larger in size) when the IPO market is active. Evidence is most consistent with a unified explanation with roots in both rational asset pricing theory and rational corporate finance decision making. (1) Return predictability coincides with large increases in systematic risk. (2) Firms choosing to go public in concentrated industries have characteristics, ownership, and financing patterns consistent with optimal IPO timing. In turn, the observed decision to issue IPOs reveals new information to the market about the industry’s future prospects.

    Teaching