Updated: January, 2008 Pingyang Gao Yale School of Management 135 Prospect Street New Haven, CT, 06511 Cell Phone: 203-508-0945 Email: Pingyang.Gao@yale.edu Webpage: http://students.som.yale.edu/phd/pfg3/ EDUCATION Ph.D. in Accounting, Yale University, Expected, May 2008 M.A. in Finance, Peking University, China, ranked 3rd/78, July 2004 B.A. in Accounting, Renmin University of China, China, ranked 1st/135, July 2002 RESEARCH INTERESTS Disclosure Regulation, Accounting Standards Setting, Incentive and Contracting, Equity Valuation, Individual Decision Making PUBLICATIONS Keynesian Beauty Contest, Accounting Disclosure, and Market Efficiency, Journal of Accounting Research, forthcoming Financial Statement Analysis for Non-Accountants, China Enterprise Management Publishing House, 2003, second edition, 2005 (book in Chinese) Practical Accounting English, China Enterprise Management Publishing House, 2003 (book in Chinese) JOB MARKET PAPER (see the abstract in the back) Disclosure Quality, Cost of Capital, and Investors Welfare, 2007 WORKS IN PROGRESS (see the abstracts in the back) Commitment, Signaling, and Disclosure Regulation Information Asymmetry, Information Precision, and Investors Welfare Common Knowledge and Momentums TEACHING INTERESTS Managerial Accounting, Financial Accounting, Financial Statement Analysis Page 1 of 5
TEACHING EXPERIENCE Teaching Assistant, Yale University, 2005-2006 Managerial Controls, MBA Level Financial Statement Analysis, MBA Level Taxes & Business Strategy, MBA Level Math Models for Management, Ph.D. Level Lecturer, China Professional Manager Qualification Program, 2002-2004 Managerial Accounting Financial Accounting HONORS Deloitte & Touché Foundation Doctoral Fellowship, 2007 AAA/Deloitte/J. Michael Cook Doctoral Consortium Fellow, Tahoe City, 2007 AAA Northeast Region Meeting Best Paper Award, Keynesian Beauty Contest, Accounting Disclosure, and Market Efficiency, 2007 Yale Fellowship 2004-2008 General Electric Peking University Scholarship, GE Foundation, 2003 Beijing Outstanding Student, Beijing Municipal Government, 2001 PricewaterhouseCoopers/Long Tao Scholarship, PWC Foundation, 2000 & 2001 Outstanding Volunteer in Community Services, Haidian District Government, Beijing, 2000 Uni-President Group Scholarship, Uni-President Foundation, 1999 Academic Excellence Award, Renmin University of China, every year from 1998 to 2002 Best Debater of Renmin University of China, 1998 CONFERENCES Presenter AAA FARS Midyear Meeting, Disclosure Quality, Cost of Capital, and Investors Welfare, Phoenix, AZ, expected, 2008 AAA Annual Meeting, Keynesian Beauty Contest, Accounting Disclosure, and Market Efficiency, Chicago, IL, 2007 AAA Northeast Region Meeting, Keynesian Beauty Contest, Accounting Disclosure, and Market Efficiency, Hartford, CT, 2007 (Best Paper Award) Page 2 of 5
Participant AEA Annual Meeting, Chicago, IL, 2007 AFA Annual Meeting, Chicago, IL, 2007 Chinese Accounting Professors Association (CAPA) Conference, Wuhan, China, 2007 PROFESSIONAL AFFILIATIONS Member, American Accounting Association (AAA) Member, American Finance Association (AFA) Member, American Economic Association (AEA) Member, Chinese Accounting Professors Association of North America (CAPANA) PROFESSIONAL QUALIFICATIONS Certified Public Accountant, China (Inactive) CFA Level I, 2004 REFERENCES Professor Shyam Sunder (Chair) Phone: 203-432-6160 Email: Shyam.Sunder@yale.edu Professor Rick Antle Phone: 203-432-6048 Email: Rick.Antle@yale.edu Professor Brian Mittendorf Phone: 203-432-3245 Email: Brian.Mittendorf@yale.edu Professor John Geanakoplos (Economics) Phone: 203-432-3397 Email: John.Geanakoplos@yale.edu Page 3 of 5
Research Abstracts: Disclosure Quality, Cost of Capital, and Investors Welfare Job market paper, 2007 Abstract: This paper addresses the question of whether cost of capital is a sufficient statistic for the welfare of current and/or new investors in the analysis of the economic consequences of disclosure quality. I identify the necessary and sufficient conditions under which disclosure quality reduces cost of capital and improves the welfare of current and new investors. Then, I further show that these conditions are not equivalent, nor do they subsume each other. Disclosure quality affects both the average level and the strategic uncertainty of investors' payoffs from trading, but cost of capital, as the endogenous compensation for the risk of a firm's cash flow, captures neither the average level nor the strategic uncertainty of the payoffs of current and new investors. As a result, cost of capital does not summarize the impact of disclosure quality on the welfare of either current or new investors. These results may help interpret the mixed empirical findings on the relationship between disclosure quality and cost of capital, inform the empirical efforts to measure the economic consequences of accounting disclosure, and add to the ongoing debate on the reform of financial reporting and disclosure regulation. Keynesian Beauty Contest, Accounting Disclosure, and Market Efficiency Forthcoming in Journal of Accounting Research Abstract: This paper examines the market efficiency consequences of accounting disclosure in the context of stock markets as a Keynesian beauty contest, an influential metaphor originally proposed by Keynes (1936) and recently formalized by Allen, Morris, and Shin (2006). In such markets, public information plays an additional commonality role, biasing stock prices away from the consensus fundamental value toward public information. Despite this bias, I demonstrate that provisions of public information always drive stock prices closer to the fundamental value. Hence, as a main source of public information, accounting disclosure enhances market efficiency, and transparency should not be compromised on grounds of the Keynesian-beauty-contest effect. Commitment, Signaling, and Disclosure Regulation Abstract: This paper examines the role of disclosure regulation as a commitment device for firms and its interaction with signaling activities. Disclosure regulation enhances the credibility of firms disclosures by imposing ex post punitive cost on distorted disclosures. Compared with signaling, disclosure regulation as a commitment device has its benefit and cost. On one hand, effective disclosure regulation does not incur deadweight loss because in equilibrium no firms distort their disclosures. The ex post punitive cost serves as a deterrent and is not actually triggered. In contrast, in a signaling equilibrium, the firm has to incur real cost to make it too costly for others to imitate. On the other hand, disclosure regulation has its inefficiency. Not only does the incentive problem of regulators compromise the effectiveness of disclosure regulation, but regulators (or courts) are also prone to the statistical errors in verifying disclosures ex post. Therefore, disclosure regulation could only imperfectly substitute for signaling. Besides providing a possible explanation for the pervasiveness of disclosure regulation, the model also predicts that more disclosure regulation is associated with less use of costly dividend policy and less concentrated insider ownership. Page 4 of 5
Information Asymmetry, Information Precision, and Investors Welfare Abstract: This paper studies the consequences of information asymmetry and information precision for investors welfare in a market with perfect competition. I demonstrate that both information asymmetry and information precision affect the welfare of uninformed and informed investors. On one hand, keeping investors average information precision constant, information asymmetry among investors makes uninformed investors worse off and informed investors better off. Because informed investors could use their private information to change their portfolios more swiftly than uninformed investors could, uninformed investors are always on the wrong side of trading. On the other hand, keeping constant the degree of information asymmetry between uninformed and informed investors, greater average information precision reduces the welfare of both groups of investors. Less uncertainty about a firm s future payoffs induces investors to compete more fiercely for the firm s stocks, and such heightened competition drives away the surplus investors gain from holding the firm s stocks. These results reconcile the intuition in Easley and O Hara (2004) with the conclusion in Lambert, Leuz, and Verrecchia (2006) and highlight the observation that cost of capital does not summarize the impact of information asymmetry or information precision on investors welfare. Common Knowledge and Momentums Abstract: This paper re-compares earnings momentum (post-earnings-announcement drift) and price momentum as a test of the theory of price inertia proposed by Morris and Shin (2006 AER). When investors with differential information are concerned about the beliefs of others, events in the distant past become common knowledge and are gradually impounded into prices. Prices contain both earnings information and nonearnings information. Furthermore, earnings information is more likely to become common knowledge over time than non-earnings information, because it is more systematically maintained over time. Therefore, the predictive power of past returns could be only a noisy proxy of the predictive power of past earnings information. Three empirical tests in this paper support this hypothesis. The first two tests demonstrate the inappropriateness of using cross-sectional tests that were typically employed in previous literature, because two momentum strategies require distinct portfolio formation rules and holding periods. The third test runs a fair horseracing by comparing the two return series from two strategies when both follow their own optimal formation rules and holding periods. The return series from earnings momentum explains that from price momentum, but the reverse is not true. Therefore, earnings momentum subsumes price momentum. Page 5 of 5