Nistler CoBPA Faculty Research

Celebrate the impact of our research.

Dr. Xiang Gao, Assistant Professor of Economics and Finance, papers accepted

Please join us in congratulating Dr. Xiang Gao, Assistant Professor of Economics and Finance, for his recent papers accepted in the journal Management Science, Journal of Business Research, and Review of Accounting and Finance.

Title: “Financial Innovation and Financial Intermediation: Evidence from Credit Default Swaps”
Authors: Xiang Gau (University of North Dakota), Alex Butler (Rice University), Cihan Uzmanoglu (Binghamton University)
Journal: Management Science (JQL 4)
Abstract: We study the influence of credit default swaps (CDS) trading on the costs of bond intermediation. After CDS initiation, CDS firms pay 12% to 28% (8 to 20 basis points) lower underwriting fees than similar non-CDS firms do. Underwriting fees decline more for riskier issuers and illiquid bonds for which the ability to hedge with CDS is more valuable. In bond offerings, participation by investors facing risk-based regulatory requirements increases after CDS initiation. Our evidence suggests that CDS-driven innovations in risk sharing contribute to the transactional efficiency of the market by reducing the financial intermediation costs of placing bonds.

Title: “Reacting to the Scope of a Data Breach: The Differential Role of Fear and Anger”
Authors: Xiang Gau (University of North Dakota), Subimal Chatterjee ((Binghamton University), Sumantra Sarkar (Binghamton University), and Cihan Uzmanogly (Binghamton University)
Journal: Journal of Business Research (JQL 4)
Abstract: We investigate how fearful and angry consumers react to the scope (number of customers affected) of a data breach. In two laboratory studies, we show that whereas fear makes consumers scope sensitive such that their intentions not to purchase from the affected retailer increases with scope, anger makes consumers scope insensitive and their repurchase intentions scope invariant. Process tests show that whereas scope indirectly affects the repurchase intentions of fearful consumers by making the mental image of the breach more vivid to them, scope does not affect how angry consumers imagine the breach nor their repurchase intentions. We find similar results in a field study, analyzing approximately 12,000 news stories of data breaches, showing that scope affects stock market reactions when the stories stress fear over anger but not when they stress anger over fear.

Title: “Firm Location and Systematic Risk”
Authors: Xiang Gau (University of North Dakota), John Topuz (North American College)
Journal: Review of Accounting and Finance (JQL 2) 
Abstract: This paper aims to investigate whether the cyclicality of local real estate prices affects the systematic risk of local firms using a geography-based measure of land availability as a quasi-exogenous proxy for real estate price cyclicality.