Research

Working papers

How Does Political Leaning Affect Solar Power Plant Efficiency? Evidence from the US, Job Market Paper, 2024

  • Conferences & Seminars: HKUST Brown Bag

  • Abstract: This study uses solar power plants as a laboratory to examine the impact of political leaning on the efficiency of green infrastructure in the US. Using plant-level data and exploiting policy discontinuities at state borders, I find that Democratic-leaning states have more but less efficient solar plants, while Republican-leaning states have fewer but more efficient ones. The efficiency gap is explained by the in-elasticity of solar plant size to installation cost in Democratic-leaning states. Discontinuity and missing mass in size distribution suggest that this inefficiency stems from developers’ self-selection due to policy distortion. I confirm this mechanism through a difference-in-differences design, leveraging an unexpected federal subsidy policy expansion in 2016. The findings highlight how politically-driven climate policies may lead to unintended efficiency loss.

Transition Risk under Capital Misallocation: The Deployment of Solar Power Plants in China, with Zhanhui Chen, 2024

  • Conferences & Seminar: NBER-SAIF Climate Finance and the Sustainable Energy Transition Meeting, 2024 China Financial Research Conference, HKUST Brown Bag*, Southern University of Science and Technology*
  • Abstract: This paper examines the financial impacts of transition risk on firms and aggregate economy through the deployment of solar power plants (SPP) in China. We found that more SPP were deployed in areas with lower solar radiation and negatively affected the local economy. Cities with SPP experienced a lower local GDP growth of approximately 0.8-1.8%. At the firm level, SPP deployment decreased corporate investment and debt financing, and increased financing costs in other sectors. These effects were more pronounced for private firms, firms relying on external financing or productive firms. The crowding-out effect under capital misallocation drives our findings.

ES Performance and Voting Premium: Evidence from Option Prices, 2022

  • Abstract: This paper examines the impact of environmental and social (ES) performance on shareholder voting rights value, estimated using option prices. Results show companies with higher ES performance have lower voting premiums, primarily driven by the product-related dimension. Exploiting negative ES news shocks, the study confirms poor ES performance increases voting premium around shareholder meetings. This suggests voting premium reflects managerial inefficiencies, consistent with the view that negative news can be used to exert disciplinary pressure during ES meetings. However, the research finds neither pronounced dynamics reflecting growing ES interest nor increased voting premium after negative ES news. These findings contribute to understanding how ES performance influences corporate governance and shareholder value, offering insights for investors, managers, and policymakers in sustainable finance.

Publications

Effects of renewable energy use in the energy mix on social welfare,  with Kwangwon Ahn, Daeyong Lee, Published at Energy Economics, 2021

Modeling GDP Fluctuations with Agent-based Model, with Kwangwon Ahn, Changyong Ha, Biao Yang, Published at Physica A: Statistical Mechanics and its Applications, 2018

Work in progress

Political Polarization and Households’ Climate Adoption, with Zhanhui Chen