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Faculty & Research


Main Research Interests

  • Financial intermediation, financial institutions, and asset market: banks; investment banks; analysts; mutual funds; private equity funds; index funds/ETF
  • Media, social media, and financial markets
  • China: innovation, corporate control, capital markets and economic development

Publications, Working Papers, Projects & Cases

Refereed Publications

1. Gender and Connections among Wall Street Analysts, (with Sterling Huang), 2017, Review of Financial Studies 30(9), 3305-3335.

What it’s about: Connections can enhance analysts’ performances and career prospects. We find that these effects however are asymmetric for men and women.

2. Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China, (with Josh Lerner and Chaopeng Wu), 2017, Review of Financial Studies 30(7), 2446-2477.

What it’s about: China’s status as the top patent filing country in the world and its push as an innovation powerhouse appears at odds with its relatively weak intellectual property rights (IPR) protection. Once we look closely within China across different regions, we find that IPR rights protection and private ownership are important for China’s innovation.

3. School Holidays and Stock Market Seasonality, (with Chunmei Lin and Yuping Shao), June 2017, Financial Management.

What it’s about: We propose public school holidays as a measure for investor inattention. We document asset pricing anomalies around public school holidays using data around the world.

4. The Disintermediation of Financial Markets: Direct Investing in Private Equity, (with Victoria Ivashina and Josh Lerner), 2015, Journal of Financial Economics 116(1), 160-178

What it's about: We use a proprietary dataset to understand the economics of directing investing in private equity, for the first time. We find very different performances on solo deals done by institutional investors and co-investments.

5. Does Media Coverage of Stocks Affect Mutual Funds' Trading and Performance?, (with Joel Peress and Lu Zheng), 2014, Review of Financial Studies 27 (12), 3441-3466.

What it’s about: Even professional fund managers’ trades are affected by mass media coverage of stocks, all else equal, suggesting limited attention. This cognitive constraint negatively affects their returns.

6. Are Stars' Opinions Worth More? The Relation Between Analyst Reputation and Recommendation Values, (with Ayako Yasuda), 2014, Journal of Financial Services Research 46 (3), 235-269.

What it’s about: There is a positive relation between reputation and recommendation value. Institutional investors - who elect star analysts through voting - are thus effective in evaluation and monitoring analysts.

7. Combining Banking with Private Equity Investing, (with Victoria Ivashina and Josh Lerner), 2013, Review of Financial Studies 26 (9), 2139-2173.

What it's about: We examine the different ways in which banks are involved in private equity investing, their potential motivations for these involvements, and the pros and cons of their involvement.

8. Competitive Dynamics in Forecasting: the Interaction of Skill and Uncertainty, (with Theos Evgeniou, Robin Hogarth, and Natalia Karelaia), October 2013, Journal of Behavioral Decision Making 26 (4), 375-384.

What it’s about: Low-skill analysts, compared to high-skill analysts, exhibit larger increase their risk-taking (by making bold forecasts that deviate from consensus) when market uncertainty increases. This is consistent with behavioral patterns previously found in laboratory settings.

9. Media Coverage and the Cross-section of Stock Returns, (with Joel Peress), October 2009, Journal of Finance 64 (5), 2023-2052

Winner of the 2009 Smith Breeden Distinguished Paper prize for the best papers published in the Journal of Finance

What it’s about: Stocks not in the media earn significant return premiums over stocks highly covered by the media, all else equal, supporting Merton’s investor recognition hypothesis.

10. The Effectiveness of Reputation as a Disciplinary Mechanism in Sell-side Research, (with Ayako Yasuda), September 2009, Review of Financial Studies 22 (9), 3735-3777.

What it’s about: Personal reputation is an effective disciplinary devise that helps maintain the quality of analyst research when conflicts of interest are high. Institutional reputation, on the other hand, is not. Thus not all reputations are equally effective as mechanisms that resolve information problems.

11. Investment Bank Reputation and the Price and Quality of Underwriting Services, December 2005, Journal of Finance 60 (6), 2729-2761.

What it’s about: After controlling for the endogenous matching between issuers and investment banks, I find a positive relation between investment bank reputation and both the price and quality of investment banking services. Banks’ reputation serves as a certification of issuer quality.

Working Papers

1. Corruption, government subsidies, and innovation: Evidence from China, Nov 2017,
with Josh Lerner and Chaopeng Wu, preparing for submission

2. Inattention as a limit to arbitrage: Evidence from School Holidays, (with Chunmei Lin and Yuping Shao), March 2017, working paper, under review

3. Out of the Limelight but In Play: Trading and Liquidity of Media and Off-media Stocks, (with Jun Qian and Huiping Zhang), Nov 2017, under review

Other Publications

1. A Market Approach to Governance of Wall Street Research – Leveraging Personal Reputation, with Ayako Yasuda, Financial Times, Mastering Financial Management, May 26, 2006

2. The Market Should be Allowed to Operate Freely - An Interview About Private Equity in China, Securities Market Weekly (China), July 15, 2006, pg. 28-30

3. Connections on Wall Street, Finance and Development (IMF publication), June 2013

Current Projects

1. The rise of ETFs, with Lu Zheng (UC Irvine), Hao Jiang (Michigan State), and Zheng
Sun (UC Irvine)

2. Local and international VCs in China, with Yasheng Huang (MIT) and Jiamin Xu (Beijing University)

3. Family values and family businesses in China, with Josh Lerner (Harvard) and Chaopeng Wu (Xia Men University)

4. Family structures and innovation in China, with Josh Lerner (Harvard) and Chaopeng Wu (Xia Men University)

5. Voluntary information events

6. Rumors versus truth in financial markets, with Theos Evegeniou (INSEAD)

7. Information discovery around drug discovery


1. Hony Capital and China Glass Holdings, with Roger Leeds, World Economic Forum, 2008

2. 3i Group plc and Little Sheep, with Roger Leeds, World Economic Forum, 2008

3. Warburg Pincus and Bharti Tele-Ventures, with Roger Leeds, World Economic Forum, 2008

4. ICICI Venture and Subhiksha, with Roger Leeds, World Economic Forum, 2008

5. City Telecom: How David Took on Goliaths in the Telecom Infrastructure Race, INSEAD 02/2010-5674, 2010

6. Harman International, 2012

7. Muddy Waters Research and China Concept Stocks, 2012


Lily Fang
Professor of Finance
INSEAD Europe Campus
Boulevard de Constance
77305 Fontainebleau

Tel: +33 1 60 72 49 92
Email: [email protected]

Assistant: Justine Guilaine
Email: [email protected]