Jin Xu
Assistant Professor of Finance, Purdue University
Email: xu68@purdue.edu
Publications
· Profitability and capital structure: Evidence from import penetration Download from SSRN Version in press
Journal
of Financial Economics 106(2), November 2012, pages 427-446.
Previously titled “Product market competition and
capital structure: Evidence from import penetration”
Abstract: I find that firms experiencing
increases in import competition significantly reduce their leverage ratios by
issuing equity and selling assets to repay debt. Using import tariffs and
foreign exchange rates as instrumental variables for import penetration, I show
that these results are not manifestations of endogenous relations between
import competition and leverage. The results are consistent with traditional
tradeoff models of capital structure that predict a positive relation between
book leverage and future expected profitability. Further evidence suggests that
import competition affects leverage through changes in the tradeoff between the
tax benefits of debt and the costs of financial distress.
· How do ex-ante severance pay contracts fit into optimal executive incentive schemes?, with Raghu Rau Download from SSRN Version in press
Journal of Accounting Research 51(3), June 2013, pages 631-671.
Previously titled “Paying for risk or shareholder
rip-off? An analysis of ex-ante severance pay contracts”
Abstract: We analyze a sample
of over 3,600 ex ante explicit severance pay agreements in place at 808 firms
and show that firms set ex ante explicit severance pay agreements as one
component in managing the optimal level of equity incentives. Younger
executives are more likely to receive explicit contracts and better terms.
Firms with high distress risk, high takeover probability and high return
volatility are significantly more likely to enter into new or revised severance
contracts. Finally, ex post payouts to
managers are largely determined by the ex ante
contract terms.
·
Insider Trading Restrictions and Top Executive
Compensation, with David J. Denis Download from
SSRN Version
in press
Journal of Accounting and Economics, forthcoming
Abstract: The use of equity incentives is significantly greater in countries
with stronger insider trading restrictions, and these higher incentives are
associated with higher total pay. These
findings are robust to alternative definitions of insider trading restrictions
and enforcement, and to panel regressions with country fixed effects. We also find significant increases in top
executive pay and the marginal use of equity-based incentives in the period
immediately following the initial enforcement of insider trading laws. We conclude that insider trading laws are one
channel through which cross-country differences in pay practices can be
explained.
