The Golden Revolving Door: Hedging through Hiring Government Officials
Speakers
Jing Wu, Ph.D.
Associate Professor, Decision Sciences and Managerial Economics CUHK Business School, Chinese University of Hong Kong
Prof. Jing Wu is an Associate Professor in the Department of Decision Sciences and Managerial Economics at the Chinese University of Hong Kong (CUHK) Business School. He receives his Ph.D. (major in operations management, minor in economics & finance) and MBA from the University of Chicago Booth School of Business and his bachelor’s degree in Electronic Engineering from Tsinghua University. Prof. Wu’s primary research fields are the operations-finance interface, global supply chains, FinTech, and business intelligence. His papers are published in leading journals such as Management Science, M&SOM, and POMS. His articles appear in business magazines such as MIT Sloan Management Review, the Economist, and Forbes. In particular, his quantitative research findings on the supply chain impact of COVID-19 and the Trade War have been reported by over 400 media outlets in over 20 countries worldwide. He is a Senior Editor for Production and Operations Management and serves on the Editorial Board for Journal of Operations Management. He has been a committee/track chair for leading international academic conferences such as INFORMS and POMS meetings. Before academia, he worked as a quantitative strategist at Deutsche Bank New York.
| Date: |
| Friday, 3 March 2023 |
| Time: |
| 10:00 am - 11:30 am |
| Venue: |
|
Institute of Data Science Innovation 4.0 I4-01-03 (Level 1 Seminar Room) 3 Research Link Singapore 117602 (Map) |
Abstract
Using both the onset of the US-China trade war in 2018 and the most recent Russia-Ukraine conflict and associated trade tensions, we show that government-linked firms increase their importing activity by roughly 33% (t=4.01) following the shock, while non-government linked firms trading to the same countries do the opposite, decreasing activity. These increases appear targeted, in that we see no increase for government-linked supplier firms generally to other countries (even countries in the same regions) at the same time, nor of these same firms in these regions at other times of no tension. In terms of mechanism, government supplier-linked firms are nearly twice as likely to receive tariff exemptions as equivalent firms doing trade in the region who are not also government suppliers. More broadly, these effects are increasing in level of government connection. For example, firms that are geographically closer to the agencies to which they supply increase their imports more acutely. Using micro-level data, we find that government supplying firms that recruit more employees with past government work experience also increase their importing activity more – particularly when the past employee worked in a contracting role. Lastly, we find evidence that this results in sizable accrued benefits in terms of firm-level profitability, market share gains, and outsized stock returns.