Chen Lin
Prof. Chen LIN
Finance
Associate Dean (Research and Knowledge Exchange)
Chair of Finance
Stelux Professor in Finance
Director, Centre for Financial Innovation and Development
DBA Programme Director

3917 7793

KK 1015

Academic & Professional Qualification

  • Ph.D., M.A., M.B.A., University of Florida
  • B.E., South China University of Technology

Biography

Professor Chen LIN joined The University of Hong Kong (HKU) as Chair of Finance at the Faculty of Business and Economics (now HKU Business School) in 2013. Before joining HKU, he was on the faculty team of the Department of Finance at the Chinese University of Hong Kong (CUHK). At CUHK, he became Full Professor in Finance in 2010 and was awarded the Choh-Ming Li Professorship in Finance in 2012. He received his Bachelor of Engineering from the South China University of Technology in 2000 and a MBA (2004), M.A. (2005) and Ph.D. (2006) from Warrington College of Business Administration, University of Florida. His research interests include banking and financial institutions, corporate finance, financial technology, entrepreneurship and innovation, finance and economic development.

Chen’s papers are published or forthcoming in Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Financial and Quantitative Analysis, Review of Finance, Management Science, The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Review of Accounting Studies, Journal of Law & Economics, Journal of Law, Economics and Organization, The Economic Journal, Journal of Public Economics, Journal of Development Economics, Journal of International Business Studies, Journal of Corporate Finance, Journal of Banking & Finance, Journal of Risk and Insurance, Journal of International Money and Finance, Journal of Empirical Finance, Journal of Comparative Economics, Journal of Regulatory Economics, Review of Industrial Organization, and others. His papers also received various awards such as the Jensen Prize (First Prize) for the Best Papers Published in the Journal of Financial Economics in the Areas of Corporate Finance and Organizations, The JFE All Star paper, the Chicago Quantitative Alliance Asian Academic Competition Research Paper Award, the Hong Kong Asian Capital Market Research Prize awarded by CFA Institute and HKSFA, two Best Paper Awards at the 9th International Conference on Asia-Pacific Financial Markets, the Bureau van Dijk prize in Corporate Finance at the 31st Australasian Finance and Banking Conference and the best paper award at the 31st Asian Finance Association Annual Conference. He currently serves on the editorial boards of various international journals including Management Science, Journal of Banking and Finance, Journal of Corporate Finance and Journal of Comparative Economics. He has been invited by the Royal Swedish Academy of Sciences to nominate candidates for the Nobel Prize in economics. He is the Principal Investigator of many RGC Competitive Earmarked Research Grants, the Project Coordinator of a RGC Theme-based Research Grant focusing on Financial Technology, Inclusion and Stability, a Co-Principal Investigator of a RGC Theme-based Research Grant, the first large-scale, theme-based business research grant in Hong Kong and a Co-Principal Investigator of the first Fintech related Research Impact Fund in Hong Kong.

Chen’s works and views have been presented in major finance conferences such as American Finance Association annual conference, European Finance Association annual conference and Western Finance Association annual conference, and various conferences held by institutions such as Asian Development Bank, China Banking Regulatory Commission, China Security Regulatory Commission, Hong Kong Monetary Authority, Hoover Institute at Stanford University, International Monetary Fund, National Bureau of Economic Research and the World Bank and covered by BBC World TV, Bloomberg, Foreign Policy, Financial Times, Harvard Law School Forum on Corporate Governance and Financial Regulation, China Daily, CNNMoney, CFA Digest, Hong Kong Satellite TV, VoxEU, Wall Street Journal (Real Time Economics) and World Bank Doing Business Report. He has provided consulting services for the Asian Development Bank, the Bank of International Settlement, China Construction Bank (Asia), Hong Kong Financial Services Development Council, Qianhai Institute of Innovative Research, and the World Bank. He was a Distinguished Visiting Professor of Finance, Entrepreneurship and Innovation at Haas School of Business, University of California, Berkeley. He served as a panel member of the Research Grant Council of Hong Kong and the RAE exercise conducted by University Grants Committee of Hong Kong. He is also a Currency Board Committee member of the Hong Kong Exchange Fund Advisory Committee, a Fintech Advisory Group member of the Hong Kong Securities and Futures Commission (SFC) and an Advisory Council member and a research fellow at HKIMR of Hong Kong Monetary Authority.

Research Interest

  • Banking and Financial Institutions
  • Corporate Finance
  • Financial Technology
  • Entrepreneurship and Innovation
  • Financial Inclusion
  • Finance and Economic Development

Selected Publications

  • “The Telegraph and Modern Banking Development, 1881-1936”,
    (with C. Ma, Y. Sun, and Y. Xu),  Journal of Financial Economics, forthcoming.
  • “Epidemic Disease and Financial Development”,
    (with J. An and W. Hou), Journal of Financial Economics, forthcoming.
  • “How Did Depositors Respond to COVID-19?”,
    (with R. Levine, M. Tai and W. Xie), Review of Financial Studies, forthcoming.
  • “Globalization and U.S. Corporate Tax Policies: Evidence from Import Competition”,
    (with T. Chen and X. Shao), Management Science, forthcoming.
  • “Corporate Immunity to COVID-19 Pandemic”,
    (with W. Ding, R. Levine and W. Xie), Journal of Financial Economics, forthcoming.
  • “How Do Board Reforms Affect Debt Financing Costs Around the World?”,
    (with L. Wei and H. Zhao), Journal of Financial and Quantitative Analysis, forthcoming.
  • “Depoliticization and Corporate Transformation”,
    (with D. Berkowitz and S. Liu), Journal of Law, Economics and Organization, forthcoming.
  • “Deposit Supply and Bank Transparency”,
    (with L. Jiang, R. Levine and W. Xie), Management Science, forthcoming.
  • “Minimum Wage and Corporate Investment: Evidence from Manufacturing Firms in China”,
    (with  H. Geng, Y. Huang, and S. Liu), Journal of Financial and Quantitative Analysis, forthcoming.
  • “Product Price Risk and Liquidity Management: Evidence from the Electricity Industry,”
    (with T. Schmid and M. Weisbach), Management Science, forthcoming.
  • “Geographical Diversification and Banks’ Funding Costs,”
    (with R. Levine and W. Xie), Management Science, forthcoming.
  • “Communication within Banking Organizations and Small Business Lending,”
    (with R. Levine, Q. Peng and W. Xie), Review of Financial Studies, 33, 2020, 5750–5783
  • “Political Investment Cycles of State-Owned Enterprises,”
    (with Q. Li and L. Xu), Review of Financial Studies, 33, 2020, 3088–3129
  • “Managerial Entrenchment and Information Production,”
    (with L. Wei and W. Xie), Journal of Financial and Quantitative Analysis, 55, 2020, 2500-2529.
  • “Bank Networks and Acquisitions,”
    (with R. Levine and Z. Wang), Management Science, 66, 2020, 5216–5241.
  • “The African Slave Trade and Modern Household Finance,”
    (with R. Levine and W. Xie), The Economic Journal, 140, 2020, 1817–1841.
  • “Cross-Border Acquisitions: Do Labor Regulations Affect Acquirer Returns?,”
    (with R. Levine and B. Shen), Journal of International Business Studies, 51, 2020, 194-217.
  • “Institutional Shareholders and Corporate Social Responsibility,”
    (with T. Chen and H. Dong), Journal of Financial Economics, 135, 2020, 483-504.
  • “Hello, Is Anybody There? Corporate Accessibility for Outside Shareholders as a Signal of Agency Problems,”
    (with M. Firth, S. Wong, and X. Zhao), Review of Accounting Studies, 24, 2019, December.
  • “Does Change in the Information Environment Affect Financing Choices?,”
    (with X. Li and X. Zhan), Management Science, 65, 2019, 5676–5696.
  • “Litigation Risk and Voluntary Disclosure: Evidence from Legal Changes,”
    (with J. Houston, S. Liu and L. Wei), The Accounting Review, 94, 2019, 247-272.
  • “Is Skin in the Game a Game Changer? Evidence from Mandatory Changes of D&O Insurance Policies,”
    (with M. Officer, T. Schmid and H. Zou), Journal of Accounting and Economics, 68, 2019, August.
  • “Competition and Bank Liquidity Creation,”
    (with L. Jiang and R. Levine), Journal of Financial and Quantitative Analysis, 54, 2019, 513-538.
  • “Does Information Acquisition Alleviate Market Anomalies? Categorization Bias in Stock Splits,”
    (with D. Kong and S. Liu), Review of Finance, 23, 2019, 245-277.
  • “Employee Representation and Financial Leverage,”
    (with T. Schmid and Y. Xuan), Journal of Financial Economics, 127, 2018, 303-324.
  • “Managerial Risk-Taking Incentives and Merger Decisions,”
    (with M. Officer and B. Shen), Journal of Financial and Quantitative Analysis, 53, 2018, 643-680.
  • “Shareholder Protection and the Cost of Capital,”
    (with J. Houston and W. Xie), Journal of Law & Economics, 61, 2018, 677-710.
  • “Corporate Resilience to Banking Crises: The Roles of Trust and Trade Credit,”
    (with R. Levine and W. Xie), Journal of Financial and Quantitative Analysis, 53, 2018, lead article.
  • “Insider Trading and Innovation,”
    (with R. Levine and L. Wei), Journal of Law & Economics, 60, 2017, 749-800.
  • “Does Information Asymmetry Affect Corporate Tax Aggressiveness,”
    (with T. Chen), Journal of Financial and Quantitative Analysis, 52, 2017, pp. 2053-2081.
  • “Competition and Bank Opacity,”
    (with L. Jiang and R. Levine), Review of Financial Studies, 29, 2016, pp. 1911-1942.
  • “Spare Tire? Stock Markets, Banking Crises, and Economic Recoveries,”
    (with R. Levine and W. Xie), Journal of Financial Economics, 120, 2016, pp. 81-101.
  • “The Financial Implications of Supply Chain Changes,”
    (with J. Houston and Z. Zhu), Management Science, 62, 2016. pp. 2520-2542.
  • “Alliances and Return Predictability,”
    (with J. Cao and T. Chordia), Journal of Financial and Quantitative Analysis, 51, 2016, pp. 1689-1717.
  • “Do Analysts Matter for Governance: Evidence from Natural Experiments,”
    (with T. Chen and J. Harford), Journal of Financial Economics, 115, 2015, pp. 383-410.
  • “Do Property Rights Matter? Evidence from a Property Law Enactment,”
    (with D. Berkowitz and Y. Ma), Journal of Financial Economics, 116, 2015, pp. 583-593.
  • “Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach,”
    (with T. Beck, Y. Ma), Journal of Finance, 69, 2014, pp. 763-817.
  • “Political Connections and the Cost of Bank Loans,”
    (with J. Houston, L Jiang, Y. Ma), Journal of Accounting Research, 52, 2014, pp. 193-243.
  • “Directors’ and Officers’ Liability Insurance and Loan Spreads,”
    (with M. Officer, R. Wang, H. Zou), Journal of Financial Economics, 110, 2013, pp. 37-60.
  • “Corporate Ownership Structure and the Choice between Bank Debt and Public Debt,”
    (with Y. Ma, P. Malatesta, Y. Xuan), Journal of Financial Economics, 109, 2013, pp. 517-534.
  • “The Client is King: Do Mutual Fund Relationships Bias Analyst Recommendations?,”
    (with Firth, M., P. Liu, Y. Xuan), Journal of Accounting Research, 51, 2013, pp. 165-200.
  • “Regulatory Arbitrage and International Bank Flows,”
    (with Houston, J., Y. Ma), Journal of Finance, 67, 2012, pp. 1845-1895.
  • “Corporate Ownership Structure and Bank Loan Syndicate Structure,”
    (with Y. Ma, P. Malatesta, Y. Xuan), Journal of Financial Economics, 104, 2012, pp. 1-22, (lead article).
  • “The Real and Financial Implications of Corporate Hedging,”
    (with Campello, M., Y. Ma, H. Zou), Journal of Finance, 66, 2011, pp. 1615-1647.
  • “Ownership Structure and Financial Constraints: Evidence from a Structural Estimation,”
    (with Y. Ma, Y. Xuan), Journal of Financial Economics, 102, 2011, pp. 416-431.
  • “Directors’ and Officers’ Liability Insurance and Acquisition Outcomes,”
    (with M. Officer, H. Zou,), Journal of Financial Economics, 102, 2011, pp. 507-525.
  • “Media Ownership, Concentration and Corruption in Bank Lending,”
    (with Houston, J. , Y. Ma), Journal of Financial Economics, 100, 2011, pp. 326-350.
  • “Ownership Structure and the Cost of Corporate Borrowing,”
    (with Y. Ma, P. Malatesta, Y. Xuan,), Journal of Financial Economics, 100, 2011, pp. 1-23, (lead article).
  • “Creditor Rights, Information Sharing and Bank Risk Taking,”
    (with Houston, J., P. Lin, Y. Ma), Journal of Financial Economics, 96, 2010, pp. 485-512.
  • “Friend or Foe? The Roles of State and Mutual Fund Ownership in the Split Share Structure Reform in China,”
    (with Firth, M., H. Zou), Journal of Financial and Quantitative Analysis, 45, 2010, pp. 685-706.
  • “Property Rights Protection and Corporate R&D: Evidence from China,”
    (with P. Lin, F. Song), Journal of Development Economics, 93, 2010, pp. 49-62.
  • “Political Decentralization and Corruption: Evidence from Around the World,”
    (with Fan, S., D. Treisman), Journal of Public Economics, 93, 2009, pp. 14-34.
  • “Corruption in Bank Lending to Firms: Cross-Country Micro Evidence on the Beneficial Role of Competition and Information Sharing,”
    (with Barth, J., P. Lin, F. Song), Journal of Financial Economics, 91, 2009, pp. 361-388.

Recent Publications

大公文匯傳媒集團辦「大灣區系列財經沙龍」 林晨:金融科技助內地中小企融資

香港大學經管學院副院長林晨昨天出席大公文匯傳媒集團主辦的「粵港澳大灣區系列財經沙龍」時,在會上提出,金融科技可以改善內地中小企融資困難的問題,例如最近港大與內地的最大金融機構合作,製作一個動態的信用模型,有助降低中小企的債務違約率。

Communication within Banking Organizations and Small Business Lending

We investigate how communication within banks affects small business lending. Using travel times between a bank’s headquarters and its branches to proxy for the costs of communicating soft information, we exploit shocks to these travel times—the introduction of new airline routes—to evaluate the impact of within-bank communication costs on small business loans. We find that reducing headquarters-branch travel time boosts small business lending in the branch’s county. Several extensions suggest that new airline routes facilitate in-person communications that boost small-firm lending.

【專訪】港大金融學者林晨:香港發展普惠金融是大勢所趨

透過金融借貸周轉資金、擴大投資已是不少企業慣用的生財之道,但即使是在金融市場非常發達而開放的香港,仍有不少小型企業連小額借貸也會被銀行拒諸門外。香港大學經濟及工商管理學院副院長(研究與知識交流)林晨早前獲批2,200萬元撥款,開展「金融科技、金融穩定和普惠金融」研究項目,冀能透過大數據、雲計算、區塊鏈、人工智能等金融科技手段,開發一套針對中小企業和消費者的風險評估管理體系,保障普羅大眾平等享用金融服務,推動金融業再發展。

Bank Networks and Acquisitions

Does the predeal geographic overlap of the branches of two banks affect the probability that they merge, postannouncement stock returns, and postmerger performance? We compile information on U.S. bank acquisitions from 1984 through 2016, construct several measures of network overlap, and design and implement a new identification strategy. We find that greater predeal network overlap (1) increases the likelihood that two banks merge; (2) boosts the cumulative abnormal returns of the acquirer, target, and combined banks; and (3) reduces employment, boosts revenues, reduces the number of branches, improves loan quality, and expedites executive turnover.

The African Slave Trade and Modern Household Finance

We evaluate the impact of the African slave trade between 1400 and 1900 on modern household finance. Exploiting cross-country and cross-ethnic group differences in the intensity with which people were enslaved and exported from Africa, we find that slave exports during the 1400–1900 period are negatively associated with current measures of household (a) access to financial services, (b) access to credit, (c) use of mobile finance, and (d) trust in financial institutions, suggesting that the slave trade has had an enduring, deleterious effect on household finance.

Political Investment Cycles of State-Owned Enterprises

Using a large panel of more than 140,000 state-owned enterprises (SOEs), this study examines SOEs’ investment behavior surrounding 82 national elections in 25 European countries between 2001 and 2015. We find that SOEs increase their corporate investment by about 29% of the sample average during national election years. This effect is more pronounced in fixed timing and closely contested elections. The effect is also stronger in countries with low institutional quality, more centralized political systems, and state-controlled banking systems. In contrast, we find the matched non-SOEs significantly decrease their corporate investment during national election years.

Corporate Immunity to the COVID-19 Pandemic

The research study co-authored by Wenzhi Ding, research postgraduate student at the University of Hong Kong; Ross Levine, Professor of Finance at the University of California, Berkeley; Chen Lin, the Stelux Professor in Finance at the University of Hong Kong; and Wensi Xie, Assistant Professor at the Chinese University of Hong Kong Business School, is covered by a number of international media.

Cross-border Acquisitions: Do Labor Regulations Affect Acquirer Returns?

Do cross-country differences in labor regulations shape (1) acquiring firms’ announcement returns and post-acquisition profits, costs, and revenues from cross-border deals, (2) the selection of cross-border targets, or (3) the success rates of cross-border offers? We discover that acquiring firms enjoy smaller abnormal returns and post-deal performance gains with targets in stronger labor protection countries; acquirers are more likely to purchase labor-dependent targets in weak labor regulation countries and more likely to use cross-border acquisitions to enter new markets when targets are in stronger labor regulation countries; and offer success rates fall when targets are in stronger labor regulation countries.

Bank Deregulation and Corporate Risk

Although research shows that competitive banks spur corporate growth, less is known about the impact of bank competition on corporate risk. Using a sample of more than 70,000 firm-year observations covering the period from 1975 through 1994, we find that deregulation that intensified competition among banks materially reduced corporate risk, especially among firms that rely heavily on bank finance. We find that competition-enhancing bank deregulation reduced corporate volatility by easing credit constraints when firms experience adverse shocks and reducing the procyclicality of borrowing.

Institutional Shareholders and Corporate Social Responsibility

This study uses two distinct quasi-natural experiments to examine the effect of institutional shareholders on corporate social responsibility (CSR). We first find that an exogenous increase in institutional holding caused by Russell Index reconstitutions improves portfolio firms’ CSR performance. We then find that firms have lower CSR ratings when shareholders are distracted due to exogenous shocks. Moreover, the effect of institutional ownership is stronger in CSR categories that are financially material. Furthermore, we show that institutional shareholders influence CSR through CSR-related proposals. Overall, our results suggest that institutional shareholders can generate real social impact.

Does Change in the Information Environment Affect Financing Choices?

Using brokerage mergers and closures as natural experiments, we examine how exogenous changes in the information environment affect a firm’s financing choice. Our difference-in-differences approach shows that exogenous increases in information asymmetry lead firms to substitute away from equity and public debt toward bank debt. Firms with higher risk tend to substitute equity for bank debt, and firms with lower risk tend to substitute bonds for bank debt. The effect of the change in the information environment on a firm’s financing choice is more pronounced for firms with worse information environments, such as those with few initial analysts and younger firms. We demonstrate that the mechanism of the change is through a reduction of the issuance of equity and bonds but with an increase of the issuance of bank loans. Further analysis reveals that such firms tend to reduce long-term borrowing, reduce their issuance of subordinated debt, and increase their revolving credit lines.

Litigation Risk and Voluntary Disclosure: Evidence from Legal Changes

This paper documents that changes in litigation risk affect corporate voluntary disclosure practices. We make causal inferences by exploiting three legal events that generate exogenous variations in firms' litigation risk. Using a matching-based fixed-effect difference-in-differences design, we find that the treated firms tend to make fewer (more) management earnings forecasts relative to the control firms when they expect litigation risk to be lower (higher) following the legal event. The results are concentrated on the earnings forecasts conveying negative news and are robust to alternative specifications, samples, and outcome variables.

Is skin in the game a game changer? Evidence from mandatory changes of D&O insurance policies

This paper examines the incentive effects of a mandatory personal deductible in liability insurance contracts for directors and officers (D&Os). Exploiting a novel German law that mandates personal deductibles for executives, we document positive returns for affected firms around the first announcement of the plan to impose a personal deductible. We also find evidence of long-run effects: affected firms decrease risk taking in operational activities and financial reporting, and improve the quality of takeover decisions. Our study shows that the structure of D&O insurance contracts matters because mandating that D&Os have “skin in the game” appears to lead to real effects on firm value.

Institutional shareholders and corporate social responsibility

This study uses two distinct quasi-natural experiments to examine the effect of institutional shareholders on corporate social responsibility (CSR). We first find that an exogenous increase in institutional holding caused by Russell Index reconstitutions improves portfolio firms’ CSR performance. We then find that firms have lower CSR ratings when shareholders are distracted due to exogenous shocks. Moreover, the effect of institutional ownership is stronger in CSR categories that are financially material. Furthermore, we show that institutional shareholders influence CSR through CSR-related proposals. Overall, our results suggest that institutional shareholders can generate real social impact.