Chapter 10 Postscript My Academic Research Career

At the request of readers, I will talk about my academic research career. I would like to describe my academic research process in several stages.The research in the first three stages was mainly focused on the US market, and it was only after the fourth stage that the research turned to the Asian market.My research direction is mainly on corporate governance, followed by research in other fields.My papers on corporate governance are generally published in Journal of Financial Economics ("Journal of Financial Economics"), Journal of Finance ("Journal of Finance"), Journal of Political Economy ("Journal of Political Economy"), American Economic Review ("American Economic Review"), Journal of International Business Studies ("Journal of International Business Studies") and other internationally important academic journals.According to the practice of international financial academic circles, the authors of each of my papers are arranged in alphabetical order.This is different from the domestic practice of ranking authors according to their contributions.

In 1986, after I received my Ph.D. from Wharton School of Business, I stayed there for a year as a lecturer.At that time, Wharton hired a world-renowned master, Robert Litzenberger, from Stanford University.Since my supervisor, Irwin Friend, once told me that Tobin's Q theory (i.e. the company's market value divided by the book value) theory in economics will be widely used in the field of finance in the future, so I will focus on Tobin's Q theory. I have consulted Mr. Litzenberger many times about application issues.After several discussions, he led me to come up with a concept, that is, Tobin’s Q greater than 1 is a good company, while Tobin’s Q is less than 1 is a bad company; a bad company’s dividend distribution is good news for shareholders , the stock price will rise, but whether a good company pays dividends or not will not affect the rise and fall of the stock price.We use empirical data from the United States to verify and indeed confirm this conclusion.The article was titled "Dividend Announcements: Cash Flow Signals and the Free Cash Flow Hypothesis," and by the time the article was finished, I had been teaching at Michigan State University in September 1987.My doctoral dissertation "An Empirical Test of the Effect of Managers' Self-Interest on Firm's Capital Structure" was co-authored with my supervisor Irwin Friend, and was successfully published in the Journal of Finance in 1988.But before the paper was published, my advisor, Irwin Friend, died of a stroke at the age of 70.This paper is the first paper published in an international academic journal in my life, but it is also the last paper published by my supervisor in his life.The paper points out that the more the number of shares held by the management of American companies in the company, the more conservative their behavior is; the lower the debt ratio of the company is.The conclusion of this last chapter is of great significance to the phenomenon of Chinese state-owned enterprise management's shareholding, that is, the more the company's management holds, the more conservative its business behavior will be.

In 1988, at Michigan State University, I suddenly received a call from Rene Stulz, the editor-in-chief of the Journal of Finance, inviting me to visit Ohio State University for a year.He hoped to have further communication with me on the application of Tobin's Q theory.We then collaborated on a paper titled "Management Performance, Tobin's Q, and the Benefits of a Successful Takeover Offer."This article is mainly to solve the confusion of the acquirers in the US market about the decline in their own stock prices when they disclose their acquisition intentions.The reason we show that stock prices fall is because Tobin's Q for most acquirers is less than 1.Therefore, the continued investment or acquisition of bad companies is bad news for shareholders.This article and another article, "Dividend Announcement," appeared in the same issue of the Journal of Financial Economics in 1989.Since these two articles were published in the same issue of the world's first-class journals at the same time, they immediately attracted the attention of the academic circle.

Rene Stulz and I went on to write another article, "Testing the Free Cash Flow Hypothesis," using Tobin's Q diagnosis.This article pointed out: If the acquirer's Q of Tobin is less than 1, and he has abundant cash in his hands, then his acquisition behavior is the most unfavorable to the shareholders.Because bad companies will waste more cash in the hands of shareholders.This article was published in the Journal of Financial Economics in 1991. These three papers are quite valued in the United States, and the citation rate of the latter two papers occupies a very important position among financial papers all over the world.Moreover, these three papers can also provide more specific theoretical guidance to the investment behavior of domestic enterprises in our country.

In my paper, I proposed that Tobin's Q greater than 1 is a good company, while Tobin's Q less than 1 is a bad company.If the company's Tobin's Q is less than 1, then according to the theories of my three papers, bad companies with Tobin's Q less than 1 should not continue to invest, but should return the excess money to shareholders. When I was still teaching at Ohio State University, at a conference I was bumped into by Stuart Gilson, a young assistant professor who was then teaching at the University of Texas, and he asked me to co-author a paper with him.His doctoral dissertation at the University of Rochester had some material on US bankrupt companies.Thanks to the training of several masters at that time, I gradually had a concept of the company's finances, and I also clearly knew how to express my point of view through words. At this time, I also knew how to complete the problem, so it was easier. Find a breakthrough.At that time, I had an idea, and I thought, we can discuss why American companies must choose to go bankrupt.Is it possible for them to settle privately with their creditors?Therefore, there is this article titled "An Empirical Study on the Restructuring of Non-performing Liabilities and the Private Restructuring of Companies", which puts forward a new point of view.In my opinion, directly declaring bankruptcy will deal too much blow to stockholders, while private settlement is more beneficial to stockholders.This article was published in the Journal of Financial Economics in 1990.

This article of mine has received the attention of the academic community, and was listed as the world's number one cited article among all published financial papers (including investment and corporate finance) in 1990, and it was also included in the Among the 50 most cited finance papers (including investment and corporate finance).In addition, this article and another article titled "Management Performance, Tobin's Q, and the Benefits of a Successful Takeover Offer" were also listed among the 28 most cited papers worldwide on corporate finance issues. Gilson was also honored by Harvard University for this article and two others he himself published.

Since our country did not have a bankruptcy system similar to that of the United States at that time, this article had little guiding effect on domestic companies, but had a considerable impact on American companies. Almost most of the financial textbooks of American companies quoted this article. paper. In 1989, I left Ohio State University to teach at New York University.These articles were published after I arrived in New York.I personally feel that at this time, my research on corporate finance has just begun to enter the situation, and it has only begun to be valued by this research field, but the literary English expression is still not up to the standard.Kose John of New York University and I co-authored an article entitled "Insider Trading Around Dividend Announcements: Theory and Evidence," which was published in the Journal of Finance in 1991.This article uses theory to prove that company insiders buy (sell) their own company's stocks to send positive (negative) signals to shareholders, and the same conclusion is drawn from empirical research.This conclusion should have considerable reference value for domestic listed companies.My evidence clearly reflects that American stockholders have confidence in insiders, so changes in insider holdings will affect stockholders' confidence.But the country is different.For example, when a listed company reorganizes, insiders divest assets first, and then buy a large number of stocks while injecting new assets with concepts.After the stock price rose, insiders immediately sold at the highest point, and then the stock price immediately plummeted, trapping other investors.Since insiders in the domestic stock market manipulate stock prices more seriously, it is difficult for investors to have confidence in it.

After I left Ohio State, I continued to publish papers with Rene Stulz.We published an article in the Journal of Financial Economics in 1992 entitled "Contagion and Competitive Effects of Bankruptcy Declarations in Industries."We find that low-debt competitors in an industry benefit from the distress of other bankrupt firms, while highly-debt competitors lose out.This article first pointed out that the debt ratio can affect the competitiveness of a company, because only companies with low debt ratios can grasp the opportunities created by bankrupt companies withdrawing from the market faster.

Afterwards, Jeffery Netter and Kose John and I published the article "Voluntary Restructuring of Large Firms Due to Declining Performance" in the Journal of Finance in 1992.This article lists in detail the reactions of major American companies when they encounter performance declines.But the conclusion of the article is that the managers of American companies reacted to the crisis by blaming others, and then laying off staff to reduce costs, etc. They seldom blamed themselves.This conclusion is very similar to the performance of some leaders of our state-owned enterprises. The good management of the enterprises is due to their own ability, and the poor management is due to institutional problems.

The early 1990s was the golden age of Hong Kong's economic development. After the high-profile establishment of the Hong Kong University of Science and Technology, it immediately recruited troops with high salaries in the international academic circles, which attracted great attention from the academic circles.At that time, I had been in the United States for 10 years. Although I did a good job in research, I always felt that I was a second-rate citizen in the United States, and I felt bad.I still remember when I was teaching at Ohio State University, a Caucasian American student saw me walk into the classroom on the first day and the first thing he said was "shit" in a low voice.But this feeling is limited to the Midwest of the United States, and it is much better after arriving in New York.And for foreigners, apart from doing professional research and teaching, it is impossible to make any other substantial contributions to the development of this society.Therefore, I always hope to have the opportunity to go back to Asia for a fight.At that time, the Hong Kong University of Science and Technology also maintained close contact with me, but in the end, Professor Shi Yizhong and Professor Leslie Young, the directors of the Finance Department of the Chinese University of Hong Kong, tried their best to hire me at the cost of a higher position.So, in 1994, I left NYU for the Chinese University of Hong Kong.

In 1994, Rene Stulz and I published the article "Tobin's Q Corporation Diversification, Corporate Performance" in the Journal of Political Economy.After the publication of this article, it led to almost hundreds of subsequent papers, and there were still quite a few follow-up articles published until 2007.This article is quite shocking to the academic community, because we put forward a counter-thinking: company diversification is harmful, and we should put all eggs in the same basket.It was around this time that I formed my own research system and was recognized by mainstream people in finance.Since my papers have a special style, that is, I like to use extremely simple words to explain the problem, most of my papers are published in the Journal of Financial Economics, because they prefer this style. My thesis also influenced the teaching system of Harvard Management School.Mr. Peter Tufano, a professor of Harvard School of Management, launched an MBA online teaching roundtable discussion in March 2003, aiming at the topic of "stock price discounts in corporate diversification", and proposed how to integrate the theory I led and contributed into the MBA of Harvard and other schools in the teaching system. This article is a study of American companies, but its conclusions should be able to give a head start to the phenomenon of a large number of domestic state-owned enterprises investing indiscriminately.Diversified management has been a hot topic for large domestic state-owned enterprises in the past few years.Taking state-owned enterprises such as Shengli Oilfield, Daqing Oilfield, and Hongta Group as examples, the average accumulated capital invested in non-main businesses by each company is as high as 50 billion to 100 billion.For example, quite a number of domestic tourism businesses such as saunas and hotels (it is said that about half of them) are invested by state-owned enterprises such as Hongta Group, such as Shanghai St. Regis Hongta.According to my survey data, no more than 5% of these non-mainstream businesses are successful and profitable.In fact, my thesis has proved the infeasibility of diversification, and the random investment of these Chinese companies only further confirmed the similar inefficiency of diversification of Chinese companies and American companies. But Li Ka-shing's diversification is successful.Tufano, a professor of finance at Harvard University, invited me to write a short commentary on this topic to teach Harvard MBA students how to understand this phenomenon.My short review is published on the website http://www.ssrn.com/fen/, the original text is: “Mr Li Ka Shing in Hong Kong is ranked as one of the top 10 wealthiest entrepreneurs in the world. He owns 6 listed comglomerates with total asset more than 100 billion USD. One of his listed company Hutchison Whampoa covers seven sectors including telecommunications, inf , finance, real estate, retailing, harbors and energy. The growth rate of EBIT of these 7 sectors ranges from -50% to +200%. However, the sales weighted average of the growth rate of EBIT of these 7 sectors combined only ranges form -5% to +20%. Because these 7 sectors are complementary to each other in their earnings, hence the reduction of volatility through complementarity creates stability but at the expense of diversification discount. Ironically, according to Mr Li - stability is his key to success." The above content is translated into Chinese, namely: "Mr. Li Ka-shing of Hong Kong is one of the ten richest men in the world. He currently owns six listed companies with assets exceeding US$100 billion. Among them, Hutchison Whampoa has seven different departments, including telecommunications, ports, Infrastructure, real estate, retail, energy, finance, etc. The growth rate of the net profit before interest and tax of the seven major industries is as low as 50% and as high as 200%, but the weighted average net profit before interest and tax growth rate of the seven major industries is only 5%. %, and the highest is only 20%, which is a full 10 times smaller. Therefore, although the total return rate of stocks in these seven major industries is lower than the sum of the separate returns of the seven major industries, the difference between the seven major industries They have complementary effects, thus forming a stable Hutchison Whampoa. This stability is actually the key to the success of Hutchison Whampoa.” The case of Li Ka-shing tells us that diversification is still desirable, but complementarity between enterprises is quite important, otherwise the risk of business operation cannot be reduced. In 1995, Rene Stulz, Annette Poulsen, I, and I published an article in the Journal of Financial Economics titled "Asset Sales: Firm Performance and the Agency Costs of Prudent Management."The article proposes: If the company sells assets to pay off debts, it is good news for shareholders. In 1996, Rene Stiilz, Eli Ofek, and I published an article in the Journal of Financial Economics entitled "Leverage, Investing, and Firm Growth."This paper proposes: if the company's Tobin's Q is less than 1, the increase in debt can limit the company's blind investment; if the company's Tobin's Q is greater than 1, the company's debt has no such effect. These two articles clearly show that debt in the US market can effectively control managers.However, this conclusion has a premise that the legal system must be very effective in protecting creditors.Therefore, when a borrower does not pay interest on time, any creditor, whether it is a bank or a small creditor holding a company's debt, can declare the borrower bankrupt or simply seize its assets to pay the debt.It is because creditors have this privilege that they can force managers to work harder, otherwise the company will go bankrupt due to excessive borrowing, which is also a big blow to managers.Therefore, judging from the experience of the United States, more debt is good news for shareholders.However, the current domestic legal system is still unable to effectively protect creditors.Therefore, debt cannot effectively control the manager. Since 1997, I have shifted my research focus to Asian corporate finance issues.Since I have been engaged in the research of the US market before, I am quite new to the Asian market. Without considerable time investment, it is difficult to achieve good research results.Moreover, the first-class journals in the United States are very repulsive to the research on the Asian market, which makes it more difficult for me to study the Asian market.After the Asian financial crisis in 1997, the World Bank began to pay more attention to the research on the Asian market. Therefore, it hired me to go to Washington DC in 1998 to participate in a research on Asian corporate governance.This is the first time I have systematically participated in large-scale Asian market research.I also taught at the University of Chicago from 1998 to 1999.This large-scale study is the first of its kind for an Asian market study.The research results are titled "East Asian Corporations: Heroes or Villains" and are held by the Library of Congress (ISBN0-8213-4631-8). Based on this research, I, together with Stijn Claessens and Simeon Djankov of the World Bank, published a paper on ownership structures in East Asia in the Journal of Financial Economics in 2000, entitled "Separation of Ownership and Control in East Asian Firms."This article is still more valued, and the citation rate of the paper is also quite high.In our paper, we show that family ownership is the norm in East Asian countries (except Japan) and that families use pyramidal structures to separate ownership and control.For example, the family controls 51% of company A, company A controls 51% of company B, company B controls 51% of company C, and company C controls 50% of company D, which is called pyramid holding.Under the control of the pyramid structure, the family's ownership of listed company D is 7%, that is, 51%X51%X51%X50%, while the control right is 50% (the lowest control right in the pyramid is selected).The pyramid structure creates a separation of ownership and control, as ownership is 7% and controlling interest is 50%.That is to say, the East Asian family has controlled quite a few companies with less equity, and the separation of ownership and control has also given the family an opportunity to exploit small and medium shareholders.I discuss the separation of ownership and control at length when I discuss the topic of corporate governance. Aiming at this research topic at that time, my colleagues Stijn Claessens and Simeon Djankov from the World Bank and my colleague Joseph Fan from Hong Kong continued to complete another paper "Analysis of Major Shareholder Incentives and Barrier Effects" (published in Journal of Finance in 2002).This article clearly puts forward the empirical research that the higher the family control, the lower the stock price, and the higher the ownership, the higher the stock price.Therefore, for Asian families, the separation of ownership and control will directly hit the stock price and harm the interests of small and medium shareholders. Since my colleagues at the World Bank and I have done quite a bit of research on East Asia, I was interested to see what the situation was in Western Europe.So, together with a young Italian assistant professor Mara Faccio, I completed the article "Ultimate Ownership of Western European Companies", which was published in the Journal of Financial Economics in 2002.The article pointed out that Western European countries are also dominated by family holdings, so I put forward the view that "family holdings are the norm, and public holdings are a special case."But the separation of family ownership and control is less severe in Western Europe than in Asia, and therefore less exploitative of minority shareholders. Leslie Young, Mara Faccio and I combined the aforementioned East Asian and Western European equity data and published the article "Dividends and Profit Embezzlement" in the American Economic Review in 2001.We use data on dividends paid by companies to understand shareholder exploitation in Western Europe and East Asia.Our conclusion is that the exploitation in Western Europe is less severe than that in East Asia, and the second largest shareholder in Western Europe has the ability to restrict major shareholders; however, the second largest shareholder and the largest shareholder in East Asia often jointly exploit other small and medium shareholders.There is also the so-called monopoly problem in China. Professor Wu Jinglian once proposed to establish the second largest shareholder and the third largest shareholder to check and balance the major shareholders.Of course, Professor Wu's proposal has its theoretical feasibility, especially in Western Europe, but in East Asia, there may be a situation where several large shareholders collude with each other and exploit other small shareholders. I will discuss these papers again later when I talk about the subject of corporate governance. After publishing these two papers, Professor Faccio was hired by seven universities in the United States from Italy to teach in the United States. Although Faccio came from an unknown small school (Catholic University of Milan) in the mountains of Italy, he almost got the letter of appointment from Harvard under my strong recommendation.Although Harvard has repeatedly told me that Faccio only needs to wait another week before the case can be finalized.But unfortunately, she couldn't bear the pressure of other schools and hurriedly chose another prestigious school, University of Notre Dame, and later transferred to University of Vanderbilt. In 2007, she became a lecturer at Purdue University at the age of 38. professor.This kind of thing happens a lot in the United States.When a school knows that another better school will issue an offer in a week, it will ask you to make a decision today, otherwise the offer will be withdrawn.Most people can't stand the pressure, because if the better school changes suddenly, nothing will happen. In fact, American universities place great emphasis on publishing papers, and there are many opportunities for young scholars.I also hope that young domestic scholars can spend more time and energy on publishing papers, because I think a booming economy, such as China, will definitely attach great importance to paper publishing in the future, and I have already seen this trend.Think about it, everyone, two or three years ago, the country might not even know what the Journal of Financial Economics is, but today, even graduate students know the importance of this journal.In fact, although I currently have more foreign affairs in the Mainland and Hong Kong, I never dare not stop doing research. I often come to the research room on weekends to do research, and this has formed a habit.Otherwise, how can I have the confidence to speak out and criticize?I think my hard research attitude should also be recognized by domestic friends. In addition to studying the shareholding structure of Europe and Asia, Professor Joseph Fan of the Hong Kong University of Science and Technology and I co-published the article "Measurement of Correlation: Application to the Decentralization of Companies" in the Journal of Business in 2000.This paper uses the input-output table to construct the enterprise correlation index (including vertical correlation and horizontal correlation).Our conclusion is that a firm's acquisition of a vertically or horizontally related firm will damage its firm value.In response to this article, Professor Fan and I are currently developing a new topic - competition in the industrial chain.In the past, when we talked about competition, we focused on an enterprise. I think we should take an industrial chain as the analysis target to observe various problems arising from the competition between industrial chains. John Doukas and I published a paper in the Journal of International Business Studies in 2003 entitled "Foreign Direct Investment, Diversification and Firm Performance".The article pointed out that if the foreign direct investment of American enterprises increases the degree of specialization of the enterprise, the stock price will rise; if it reduces the degree of specialization of the enterprise, the stock price will fall.The conclusions of these two papers are similar to those of my 1994 paper on diversification. Yoser Gadhoum, Leslie Young and I published an interesting paper in European Financial Management in 2005 - "Who Controls the United States", which pointed out that the United States is not completely controlled by the public as we think.Our research found that 59% to 74% of listed companies have large controlling shareholders, and this ratio is even higher than 58% of Japanese listed companies controlled by major shareholders of banks.Moreover, 36% of listed companies in the United States are controlled by large families, which is similar to the 37.26% in Germany, but far higher than that in Japan, France, and the United Kingdom.We also found that 24.57% of U.S. listed companies are controlled and operated by large families, which is even higher than Asian companies. 16.33% of US listed companies are controlled by financial institutions, and this proportion is similar to the proportion of European listed companies controlled by financial institutions. In 2006, I, Wai Ming Fang, Yoser Gadhoum, and Nataj Attig jointly published a paper entitled "The Impact of Major Shareholders' Shareholding on Information Asymmetry and Stock Liquidity".This paper follows the spirit of my 2002 paper in which we found that the separation of family control and ownership affects not only stock prices but also stock liquidity.For Asian families, the separation of ownership and control not only directly hits the stock price, damages the interests of small and medium investors, but also restricts the liquidity of stocks. Leslie Young, Mara Faccio, I, and I published an article titled "Dividends and Profit Expropriation" on the American Economic Review in 2001.At the same time, we studied another topic "Debt and Interest Embezzlement".Unfortunately, this article was delayed until 2007 before it was known that it might be published in the Journal of International Business Studies, which shows how difficult it is to publish a paper in a foreign country.Our research found that family companies in Asia often use related party transactions to invest in relatively risky projects with related bank money.This phenomenon of using bank money to invest in risky projects also exists in Europe, but unlike Asia, they do not use related party transactions.Moreover, European banks are very cautious about lending to listed companies at the bottom of the pyramid, because they are at the bottom of the pyramid and risk too much, so they are less willing to lend to listed companies in order to ensure creditor's rights. Domestic academic circles are relatively familiar with the field of economics, but relatively unfamiliar with the field of finance.I want to talk about the relationship between economics and finance first, and then introduce finance systematically.It is undeniable that domestic progress is very fast. Recently, Tsinghua University in the Mainland has continuously issued appointment letters to professors from various universities in Hong Kong. During the two years from 2005 to 2007, Tsinghua University poached Professor Bai Chongen from the University of Hong Kong and Professor Li Daokui from the Hong Kong University of Science and Technology with an annual salary of 600,000 RMB.Recently, Professor Li Hongbin was poached from our Chinese University of Hong Kong with a high annual salary of 1.04 million RMB. Economics is a very large subject that includes many sub-disciplines such as money and banking, economic theory (which in turn includes microeconomics and macroeconomics), economic development, econometrics, comparative institutional economics, economic history and History of economic thought, international finance, international trade, mathematical economics, game theory and agricultural economics, etc.Before the 1970s, finance was a sub-discipline of economics, but due to the rapid development of the financial market after the 1970s, finance gradually formed an independent discipline and moved to the business school (or School of Management). The School of Management gradually grew into an independent school after the 1970s, and the school generally has six or seven majors—accounting, finance, corporate strategy and management, organizational behavior, marketing, and decision science and business economics.However, some domestic university management schools have too detailed a division of majors, such as securities, international finance, financial engineering and so on.Some domestic universities even have schools of accounting and finance, including securities departments and so on.This kind of detailed professional division is almost unique in the whole world.This subdivision method immediately brings a serious problem-most courses are too similar and too repetitive.For example, the Department of Securities, the Department of International Finance, and the Department of Financial Engineering all belong to the Department of Finance in all countries in the world, and even if the Department of Finance itself can offer only seven or eight courses that are not very repetitive.If the Department of Finance is divided into three majors, then these seven or eight courses that are not very repetitive will have to be repeated in almost every major.Therefore, in order to show the difference, the securities department has to offer many institutional courses, such as introduction to Chinese securities market, introduction to foreign securities market, securities laws and regulations, and codes of conduct for securities markets.The Department of International Finance also has to offer courses such as Introduction to International Financial Markets, International Securities Markets, International Trade Practices, and International Financial Practices.Since these courses have no theoretical framework at all, students only learn some history and institutions.For example, half of the courses on Introduction to China's Securities Market discuss the history of the establishment of stock exchanges.I am not saying that these institutional courses are not important, but that these too practical courses do not need to be learned in school at all. As long as students have a good theoretical foundation, they can read it by themselves.It is because undergraduates spend too much time studying institutional courses, but relatively too little basic courses or theoretical courses in mathematics and science.Therefore, the quality of mainland business students is obviously deviated, and they cannot adapt to postgraduate courses in Hong Kong and abroad.At present, the recruitment of postgraduates in business majors in Hong Kong and foreign universities is basically undergraduates majoring in science and engineering in the Mainland, rather than business students. The field of finance basically includes two mainstreams - the first is investment (Investment), and the second is corporate finance (Corporate Finance) or corporate governance (Corporate Governance). Investing is the study of pricing patterns in financial markets and financial assets, including stocks, bonds, options, and futures.In terms of courses, the following courses can be offered in the field of investment - investment (discussing the organization and characteristics of financial markets, the basics of stocks, bonds, options and futures: characteristics and basic pricing), fixed income bonds (specializing in government bonds and Characteristics and pricing of corporate bonds), international financial markets (introduce the organization and operation of international financial markets, the use of financial instruments, interest rates, pricing and characteristics of exchange rates, etc.), options and futures (specially discuss the characteristics and pricing of options and futures ). Corporate finance mainly discusses the decision-making process of the company's physical investment and financial operations, while corporate governance discusses the impact of these decisions on shareholders' rights and interests. Therefore, it is difficult to clearly separate corporate finance and corporate governance.In the field of corporate finance, the following courses can be offered: corporate finance, corporate mergers and acquisitions, and corporate governance.Corporate finance courses discuss topics such as how to evaluate the returns and risks of (real) investment projects, the financing of investment projects, dividend policy, and bankruptcy and restructuring.The course of corporate mergers and acquisitions explores how to use the evaluation and financing methods learned in the course of corporate finance to carry out the acquisition of enterprises or projects.Corporate governance explores the impact of corporate financial policies on shareholders' equity, that is, how to maximize corporate value through the operation of corporate finance.Due to the shortage of teachers, general schools do not offer corporate governance courses.Some schools also offer courses in international corporate finance, but generally the response is not very good.The main reason is that the difference between this course and the corporate finance course is not big enough, and there are few textbooks on the market. I think readers may also want to know about the research direction of investment and corporate finance.The research direction of investment is the theoretical pricing of financial assets and the empirical verification of theoretical models.Its important topics include asset pricing model (CAPM), risk arbitrage model (APT), microstructure (Microstructure), options and futures (Options & Futures) and general equilibrium pricing model (General Equilibrium), etc.The field of investment studies has very high requirements for mathematics and statistics. Since domestic students have been well educated in mathematical logical thinking since childhood, it is easier to give full play to their own advantages in this field.Several accomplished Chinese financiers, such as Wang Jiang from MIT, have gained a lot in this field. In contrast, I can only say that I have dabbled in this field. The research directions of corporate finance mainly fall into the following six categories: dividend policy, debt policy, bankruptcy and reorganization, mergers and acquisitions, diversification and equity structure.The research on corporate finance is mainly based on actual corporate data for empirical identification.Although theoretical models occasionally make use of advanced mathematical theories, theory is not the mainstream of corporate finance after all.The more valued theories in corporate finance are based on logical deduction rather than mathematical derivation.So, when readers read the theories of Michael Jensen, Andrei Shleifer, etc., they don't even see an equation.This is in sharp contrast to the advanced mathematical derivation form of investment. The recent popular corporate governance research in China is to explore the impact of corporate financial policies on shareholders' rights and interests. Therefore, we can say that the main purpose of corporate governance is to maximize corporate value and protect small and medium shareholders.My research basically falls under the umbrella of corporate finance and corporate governance. The empirical test of corporate finance is different from investing.The empirical appraisal of investment science is mainly aimed at theories derived from mathematics, and the structure and logic of mathematics are very clear, so it can be used as a direct test basis.但公司财务的实证研究大部分是针对以逻辑推演之理论为主，结构性不清楚，当我们想鉴定一个理论对，你所能收集到的公司实际数据基本上是不足的，因此，我们只能做一个间接的检验，而做直接检验的可能性不大。 由于公司财务的实证检验只是间接的检验，因此，文字表达就相当得重要。你必须通过文字的表达将不足的资料所得出的统计结果变成一个有意义的结论。而这个结论必须对公司财务的理论模型具有相当大的参考价值，也就是你得把故事给说圆了。为了把故事说圆了，因此，国际一流的期刊对英文的要求就相当高，甚至要求要达到文学化的水平，否则审稿人可以因为英文表达不够优美而拒绝你的稿件。这是一个极为艰巨的任务，而且特别不适合中国人良好的数学逻辑思维（以及不足的英文文字表达思维的能力）。因此，公司财务领域有成就的中国人简直可以说是凤毛麟角。 同时，公司财务的领域特别重视小圏圏，你想要发表文章必须要适应当时的公司财务学术主潮流。凭空想象一个有创意的题目而且顺利发表这样的事情不太可能。因此，我常常告诉我的年轻同事和博士生如果想顺利发表文章，那么最好是根据前人所发表过的观点而加以完善或修正，千万不要自认为有创意而径行投稿，否则被期刊拒绝过几次后，你再也没有信心了，而无法发表文章的结果就是必须离开学术界。 与理工科完全不同，金融学论文投稿非常困难。举例而言，投稿金融学的顶级期刊Journal of Financial Economics（JFE）一次就必须付400美元，但拒绝率高达95%以上。如果JFE对你的文章感兴趣，那么至少要经过4~5次的修改，但每一次修改都要付400美元。整个修改的过程大概需要两三年的时间，而你也必须花费2000美元左右。另外一个重要期刊是Journal of Finance（JF），拒绝率也高达95%以上。JF投稿比较便宜，每一次投稿大概需要100美元。但也必须修改个两三次，而每一次都要付钱，整个过程大概需要一两年的时间。我个人觉得JFE困难得多，我每一次在JFE发表一篇论文都会觉得被审稿人磨掉了一层皮。当然，我当审稿人时也一样会磨掉对方一层皮。 The book is over!