NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Luo Zuo

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Working Papers and Chapters

December 2015Sharing Risk with the Government: How Taxes Affect Corporate Risk-Taking
with Alexander Ljungqvist, Liandong Zhang: w21834
Using a natural experiment in the form of 113 staggered changes in corporate income tax rates across U.S. states, we provide causal evidence on how taxes affect corporate risk-taking decisions. Higher taxes are expected to reduce the expected profit per unit of risk, as the government shares in a firm’s upside but not in its downside. Consistent with this prediction, we find that firms respond to tax increases by reducing risk. We find no corresponding sensitivity to tax cuts, suggesting that firms find it easier to reduce risk than to increase it. Tax loss-offset rules moderate firms’ sensitivity to taxes by allowing firms to partly share downside risk with the government.
November 2011Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles
with Antoinette Schoar: w17590
Economic conditions when CEOs enter the labor market have a lasting impact on their career paths and managerial styles. Managers who begin their careers during a recession become CEOs more quickly, but at smaller firms. Recession CEOs also display a more conservative style, with less investment in capex and R&D, more cost cutting, and lower leverage, working capital needs, sales growth, and stock return volatility. The career effects appear to be driven by differences in these CEOs’ first jobs, and suggest that the early work environment is important to the formation and selection of managers.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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