Jingxiong (Tony) Hu
Welcome! I am an Assistant Professor of Finance at Warwick Business School of the University of Warwick.
My research interests include corporate finance, financial markets and financial institutions.
I received my Ph.D. in Financial Economics from Northwestern University in 2023.
CV (updated Nov 2022)
Email: Tony.Hu@wbs.ac.uk
Working Papers
This paper analyzes optimal leverage dynamics with personal and corporate taxes and financial distress costs. Key to the analysis, the marginal tax benefit of debt depends on whether the debt is used for financing real investment or financial restructuring. The theory features continuous leverage adjustments and no security issuance costs. There are two local leverage targets for firms with leverage above or below a threshold. The model generates a leverage distribution that matches the data, including many zero-leverage firms. Policymakers can reduce distress costs without losing tax revenue by raising the personal tax rate and lowering the corporate tax rate.
Conferences: NFA 2023, FMA 2023 (Semifinalist for best paper in corporate finance), Finance Theory Group summer school, Asian Finance Theory Group (scheduled)
We empirically study how "dual-traders,'" whose only information comes from order flow of their clients, affect price discovery. Dual traders partly infer the asset's value from clients' order flow and exploit it in simultaneous or subsequent trading. In our empirical setting, closing auctions have high transaction fees and large pricing errors due to the growing trading demand of passive investors. Brokers offer alternative trading venues that charge lower transaction fees, guarantee execution at closing auctions' prices, and dual trade. Using a quasi-experimental shock -- the NYSE closing auction fee cut -- we find that the alternative venues reduced the pricing errors in market close prices. We explain the finding with a model where liquidity provided by dual traders mitigates the impact of market maker's overnight inventory cost on price efficiency.
Conferences: EuroFA 2022, NFA 2022, FMA 2022 (Semifinalist for best paper in market microstructure), AsianFA 2022, Microstructure Exchange, Trans-Atlantic Doctoral Conference 2021, MFA 2020