Hongxun Ruan

Hongxun Ruan

Contact Information

  • office Address:

    3620 Locust Walk, Suite 2300, Philadelphia, PA, 19104

Research Interests: Empirical Corporate Finance, Innovation, Institutional Investors, Investment, Industrial Organization

Links: CV

Overview

Thanks for visiting my site.

I’m a job market candidate from Finance department at the Wharton School of University of Pennsylvania.

I will be available for interviews at AFA 2018, Philadelphia.

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Research

Social Capital and Innovation: Evidence from Connected Holdings
(Job Market Paper)

This paper investigates how social capital affects innovation. I measure a firm’s social capital with connected holdings, which is the fraction of equity of a particular firm held by mutual fund managers that are connected to the firm’s board members through educational networks. I use plausibly exogenous variation in the network sizes of board members as an instrument for connected holdings. I find higher connected holdings lead to larger number of patents granted, more patent citations and higher firm value created by patents. Connected holdings foster innovation by helping to reduce short-term capital market pressures and to increase management job security.

Marketing Mutual Funds (with Nikolai Roussanov and Yanhao Wei)

Marketing and distribution expenses constitute a large fraction of the cost of active management in the mutual fund industry. We investigate their impact on the allocation of capital to funds and on returns earned by mutual fund investors. We developed and estimate a structural model of costly investor search and fund competition with learning about fund skill and endogenous marketing expenditures. We find that marketing is nearly as important as performance and fees for determining fund size. Restricting the amount that funds can spend on marketing substantially improves investor welfare, as more capital is invested with passive index funds and price competition decreases fees on actively managed funds. Average alpha increases as active fund size is reduced, and the relationship between fund size and fund manager skill net of fees is closer to that implied by a frictionless model.

Why Has Corporate Investment Been So Weak?
(with Joao Gomes and Vito Gala)

We use a dynamic stochastic model of firm investment to investigate quantitatively the causes behind the collapse of investment during the Great Recession and its ongoing slump. Our analysis focuses on three of the most commonly proposed explanations: (i) a secular decline in productivity growth; (ii) a tightening of financial constraints; and (iii) an increase in policy uncertainty. We find that all three factors are important to account for the sharp decline in investment during the Great Recession. By contrast, below trend productivity alone provides the best account for the slow investment recovery.

  • Hongxun Ruan, Social Capital and Innovation: Evidence from Connected Holdings.

    Abstract: This paper investigates how social capital affects innovation. I measure a firm's social capital with connected holdings, which is the fraction of equity of a particular firm held by mutual fund managers that are connected to the firm's board members through educational networks. I use plausibly exogenous variation in the network sizes of board members as an instrument for connected holdings. I find higher connected holdings lead to larger number of patents granted, more patent citations and higher firm value created by patents. Connected holdings foster innovation by helping to reduce short-term capital market pressures and to increase management job security.

  • Nikolai Roussanov, Hongxun Ruan, Yanhao Wei, Marketing Mutual Funds.

    Abstract: Marketing and distribution expenses constitute a large fraction of the cost of active management in the mutual fund industry. We investigate their impact on the allocation of capital to funds and on returns earned by mutual fund investors by estimating a structural model of costly investor search and fund competition with endogenous marketing expenditures. We find that marketing is nearly as important as performance and fees for determining fund size. Restricting the amount that can be spent on marketing by funds substantially improves investor welfare, as more capital is invested with passive index funds and price competition drives down fees on actively managed funds. Average alpha increases as active fund size is reduced, and the relationship between fund size and fund manager skill net of fees is closer to that implied by a frictionless model.

  • Vito Gala, Joao F. Gomes, Hongxun Ruan (Working), Why Has Corporate Investment Been So Weak?.

    Abstract: We use a dynamic stochastic model of firm investment to investigate quantitatively the causes behind the collapse of investment during the Great Recession and its ongoing slump. Our analysis focuses on three of the most commonly proposed explanations: (i) a secular decline in productivity growth; (ii) a tightening of financial constraints; and (iii) an increase in policy uncertainty. We find that all three factors are important to account for the sharp decline in investment during the Great Recession. By contrast, below trend productivity alone provides the best account for the slow investment recovery.

Teaching

Teaching Assistant:

  • Macroeconomics & Global Economy (UD & MBA), Prof. Joao Gomes, 2013-2014
  • Monetary Economics and the Global Economy (UD & MBA), Prof. Mathieu Taschereau-Dumouchel, 2014
  • Advanced Corporate Finance (UD & MBA) , Prof. Vito Gala, 2015
  • Behavioral Finance (UD & MBA), Prof. Nikolai Roussanov, 2016
  • Investment Management (UD & MBA), Prof. Donald Keim, 2016

Awards and Honors

  • University of Pennsylvania Dean’s Fellowship for Distinguished Merit, 2012-2016
  • Mack Institute for Innovation Management Grant, 2016
  • Jacobs Levy Equity Management Center for Quantitative Financial Research Grant, 2016
  • Rodney L. White Center for Financial Research Grant, 2016
  • Univ. of Penn Dean’s Fellowship for Distinguished Merit, 2012-2016

Activity

Latest Research

Hongxun Ruan, Social Capital and Innovation: Evidence from Connected Holdings.
All Research

Awards and Honors

Univ. of Penn Dean’s Fellowship for Distinguished Merit 2012
All Awards