research | Hui Xu

Benchmarking the Effects of the Fed’s Secondary Market Corporate Credit Facility Using Yankee Bonds [Online Appendix] (with George Pennacchi), Journal of Financial Markets, forthcoming
The SMCCF’s effects spilled over to long-dated US investment-grade bonds with maturity greater than 5 years, but appeared to harm the sub-investment grade bonds.

Actions Speak Louder Than Words: The Valuation of Green Commitment in the Corporate Bond Market (with Peter Pope and Yang Wang), Journal of Accounting Research, revise & resubmit
Green bond issuance decreases the yield spreads of outstanding conventional bonds. This is at odds with the traditional theory where new issuance of debt would raise the issuer’s leverage and dilute the existing bondholders’ liquidation claim, but is consistent with green bonds being a commitment device and conventional bonds becoming “greener”.
The China Trade Shock and the ESG Performances of US Firms (with Yue Wu), submitted
Import competition from China improves the ESG performance of US local companies. The improvement is not driven by the change in production process, e.g., the shift to technology-intensive sectors, but is consistent with the differentiation effort by US producers. The improvement in ESG performance has real consequences.

Local Preference for Bonds with Longer Maturity (with Peter Pope and Yang Wang), last updated: Nov 2022
Consistent with long-dated bonds being more information sensitive, insurance companies, one of the largest corporate bond investors, are more likely to hold long-term bonds from local issuers. As a result, their local bond holdings tend to have longer maturities.

theory papers before 2020

One Risk, Two Debts: The Effects of Rare Disasters on Credit Markets
A tractable general equilibrium model featuring stocks, risk-free bonds and risky bonds. Absent the continnum of spot contracts required to fully hedge the rare disaster risk, the model quantifies to what extent a risky debt facilitates risk sharing in a economy subject to disaster risk.
Industry Dynamics and Capital Structure (Non)Commitment (with Shiqi Chen)
The leverage noncommitment by shareholders increases the cost of debt and entry barrier, affects the firm distribution and market concentration, and gives rise to real effects.