Research Papers
Calomiris, C., Mamaysky, H., and Yang, R. 2023. Measuring the Cost of Regulation: A Text-based Approach.
Revise-and-resubmit at Journal of Financial and Quantitative Analysis
[Latest version available upon request.]
Abstract:
We derive a measure of firm-level regulatory exposure from the text of corporate earnings calls. We use this measure to study the effect of regulation on companies’ growth, leverage, profitability, and equity returns. Higher regulatory exposure results in slower sales and asset growth, lower leverage, reduced profitability, but higher post-call equity returns. These effects are mitigated for larger firms. Our findings suggest that both compliance risk and physical operational cost are consequences of increased regulation, but the magnitude of the effects of compliance risk are larger. The topical context of regulation is important for future firm-level outcomes.
Yang, R. 2022. Socially Responsible Investing in a Free and Democratic Society
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4032783
Abstract:
Socially responsible investing aims to make the world a better place by using capital markets as a tool to tackle environmental and social problems that are typically addressed by the government. While this goal at face value is laudable, I show that socially responsible investors exacerbate such problems in a model where businesses are neither perfectly good nor perfectly bad. Depending on the degree of wealth inequality and dispersion in investor tastes, socially responsible investing can result in outcomes inconsistent with those derived from the will of the people.
Yang, R. 2021. Credit Ratings in the Age of Environmental, Social, and Governance (ESG)
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3595376
Abstract:
I present the first study that systematically examines the implications of ESG adoption by credit rating agencies. I find that, with a recent move by Standard & Poor’s and Moody’s towards incorporating ESG issues into their analysis, credit ratings positively reflect firms with lower carbon emissions and better social ratings. Despite the recognition of such issues by credit rating agencies, I discover no consistent evidence of improvement in the informational quality of credit ratings. This is concerning as the stated purpose of ESG adoption is to enhance their assessment of credit risk.
Yang, R. and Koci, I. 2020. Socially Conscious Investors Mitigating Stock Market Losses in a Time of Crisis: Evidence from the COVID-19 Crash
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3640752
Abstract:
Recent years have witnessed a surge in investors with a socially responsible investment mandate. We study stock returns associated with this practice in the COVID-19 crash and the surrounding months. Stocks with greater socially responsible investor demand experience superior returns, lower volatility, and better market valuations during the crash. These effects largely disappear post-crash. No differences are found with respect to sales, gross profitability, and operating income as well as expectations about the long-term growth rate of earnings per share. This suggests that socially responsible investors can act as a moderating force by mitigating losses in a time of crisis.
Publications
Yang, R. 2022. What Do We Learn From Ratings About Corporate Social Responsibility (CSR)? New Evidence of Uninformative Ratings. Journal of Financial Intermediation. Vol. 52.
Yang, R. 2013. When is BitCoin a Security Under U.S. Securities Law? Journal of Technology Law and Policy. Vol. 18, Issue 2: 99-129.
Yang, R. 2013. Could the Virtual Be Similar to the Real? A First Look from an Efficient Markets Perspective. The Quarterly Journal of Finance. Vol. 3. No. 4: 1-21.
Yang, R. 2012. Virtual World Bots: A Defense for Fair Use. Arizona State Sports and Entertainment Law Journal. Vol. 2, Issue 2: 95-138.
Koehler, M., Yang, R., Gray, L. 2012. Cell-based Volume Integration for Boundary Integral Analysis. International Journal for Numerical Methods in Engineering. Vol. 90, Issue 7: 915–927.
Calomiris, C., Mamaysky, H., and Yang, R. 2023. Measuring the Cost of Regulation: A Text-based Approach.
Revise-and-resubmit at Journal of Financial and Quantitative Analysis
[Latest version available upon request.]
Abstract:
We derive a measure of firm-level regulatory exposure from the text of corporate earnings calls. We use this measure to study the effect of regulation on companies’ growth, leverage, profitability, and equity returns. Higher regulatory exposure results in slower sales and asset growth, lower leverage, reduced profitability, but higher post-call equity returns. These effects are mitigated for larger firms. Our findings suggest that both compliance risk and physical operational cost are consequences of increased regulation, but the magnitude of the effects of compliance risk are larger. The topical context of regulation is important for future firm-level outcomes.
Yang, R. 2022. Socially Responsible Investing in a Free and Democratic Society
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4032783
Abstract:
Socially responsible investing aims to make the world a better place by using capital markets as a tool to tackle environmental and social problems that are typically addressed by the government. While this goal at face value is laudable, I show that socially responsible investors exacerbate such problems in a model where businesses are neither perfectly good nor perfectly bad. Depending on the degree of wealth inequality and dispersion in investor tastes, socially responsible investing can result in outcomes inconsistent with those derived from the will of the people.
Yang, R. 2021. Credit Ratings in the Age of Environmental, Social, and Governance (ESG)
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3595376
Abstract:
I present the first study that systematically examines the implications of ESG adoption by credit rating agencies. I find that, with a recent move by Standard & Poor’s and Moody’s towards incorporating ESG issues into their analysis, credit ratings positively reflect firms with lower carbon emissions and better social ratings. Despite the recognition of such issues by credit rating agencies, I discover no consistent evidence of improvement in the informational quality of credit ratings. This is concerning as the stated purpose of ESG adoption is to enhance their assessment of credit risk.
Yang, R. and Koci, I. 2020. Socially Conscious Investors Mitigating Stock Market Losses in a Time of Crisis: Evidence from the COVID-19 Crash
URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3640752
Abstract:
Recent years have witnessed a surge in investors with a socially responsible investment mandate. We study stock returns associated with this practice in the COVID-19 crash and the surrounding months. Stocks with greater socially responsible investor demand experience superior returns, lower volatility, and better market valuations during the crash. These effects largely disappear post-crash. No differences are found with respect to sales, gross profitability, and operating income as well as expectations about the long-term growth rate of earnings per share. This suggests that socially responsible investors can act as a moderating force by mitigating losses in a time of crisis.
Publications
Yang, R. 2022. What Do We Learn From Ratings About Corporate Social Responsibility (CSR)? New Evidence of Uninformative Ratings. Journal of Financial Intermediation. Vol. 52.
Yang, R. 2013. When is BitCoin a Security Under U.S. Securities Law? Journal of Technology Law and Policy. Vol. 18, Issue 2: 99-129.
Yang, R. 2013. Could the Virtual Be Similar to the Real? A First Look from an Efficient Markets Perspective. The Quarterly Journal of Finance. Vol. 3. No. 4: 1-21.
Yang, R. 2012. Virtual World Bots: A Defense for Fair Use. Arizona State Sports and Entertainment Law Journal. Vol. 2, Issue 2: 95-138.
Koehler, M., Yang, R., Gray, L. 2012. Cell-based Volume Integration for Boundary Integral Analysis. International Journal for Numerical Methods in Engineering. Vol. 90, Issue 7: 915–927.