Area of Expertise
- Asset Pricing
- Corporate Finance
- Debt Issues
- Dividend Policy
- Mergers and Acquisitions
- Public Equity
- Return Predictability
- Stock Validation Models
Ming Dong’s main research areas include corporate finance and behavioural finance. He has published work in mergers and acquisitions in top journals including Journal of Finance and Journal of Financial Economics. He has also worked in dividend policy, stock valuation modeling and option pricing. His recent interests include IPO valuation and market performance, determinants of public equity and debt issues, the effects of diversification on firm performance, the effects of stock market misvaluation on corporate investments, new issues, and mergers.
2007 Schulich Research Fellowship Award
2003 American College Paper Award, Denver, USA.
2002 Best Corporate Finance Paper Award, NFA 2002, Banff, Canada
2002 CFP Board of Standards in Chicago Research Award, USA
Dong, M., Dutordoir, M. and Veld, C. (2019), "How Can We Improve Inferences from Surveys? A New Look at the Convertible Debt Questions from the Graham and Harvey Survey Data", Journal of International Financial Markets, Institutions & Money , 61, 213-222.Keywords
We revisit the survey questions on convertible bond issue motives from the influential study of Graham and Harvey (2001). Our question-conditional analysis connecting survey answers with firm characteristics reveals that the conclusions on two of the four convertible debt theories from the original study need to be revised. More particularly, the delayed equity rationale and the sequential financing rationale on convertible bond issuance do not receive support from the question-conditional tests. Our results indicate that adding a question-conditional analysis is essential in obtaining correct inferences from survey data.
Dong, M., Horst, J., Loncarski, I. and Veld, C. (2012), "What Drives Security Issuance Decisions: Market Timing, Pecking Order, or Both?", Financial Management, 41, 637-663.
We study market timing and pecking order in a sample of debt and equity issues and share repurchases of Canadian firms from 1998 to 2007. We find that only when firms are not financially constrained is there evidence that firms issue (repurchase) equity when their shares are overvalued (undervalued) and evidence that overvalued issuers earn lower postannouncement long‐run returns. Similarly, we find that only when firms are not overvalued do they prefer debt to equity financing. These findings highlight an interaction between market timing and pecking order effects.
Dong, M., Hirshleifer, D. and Teoh, S. (2012), "Overvalued Equity and Financing Decisions", Review of Financial Studies, 25(12), 3645-3683.
We test whether and how equity overvaluation affects corporate financing decisions using an ex ante misvaluation measure that filters firm scale and growth prospects from market price. We find that equity issuance and total financing increase with equity overvaluation, but only among overvalued stocks, and that equity issuance is more sensitive than debt issuance to misvaluation. Consistent with managers catering to maintain overvaluation and with investment-scale economy effects, the sensitivity of equity issuance and total financing to misvaluation is stronger among firms with potential growth opportunities (low book-to-market, high R&D, or small size) and high share turnover.
Dong, M. and Tremblay, A. (Forthcoming), "Does the Weather Influence Global Stock Returns?", Critical Finance Review.
We investigate the effects of five weather conditions (sunshine, wind, rain, snow depth, and temperature) on daily index returns of 49 countries from 1973 to 2012. We hypothesize that the effects of the weather on investor behavior depend on climate and season, and examine the relation between weather and daily returns separately for each temperature region (cold, hot, and mild) and each month. We find that the effects of weather on returns are contingent on climate and season and more pervasive than previously documented. A hedge strategy that exploits the daily return predictability of the weather generates up to 25% annualized out-of-sample gross profits during 1993-2012. The patterns of weather effects across climates and seasons suggest that weather influences investor psychology.
Dong, M., Hirshleifer, D. and Teoh, S. (Forthcoming), "Misvaluation and Corporate Inventiveness", Journal of Financial and Quantitative Analysis.
We test how market overvaluation affects corporate innovation. Estimated stock overvaluation is very strongly associated with measures of innovative inventiveness (novelty, originality, and scope), as well as R&D and innovative output (patent and citation counts). Misvaluation affects R&D more via a non-equity channel than via equity issuance. The sensitivity of innovative inventiveness to misvaluation is increasing with share turnover and overvaluation. The frequency of exceptionally high innovative inputs/outputs increases with overvaluation. This evidence suggests that market overvaluation may generate social value by increasing innovative output and by encouraging firms to engage in highly inventive innovation.
Dong, M., Au, S. and Tremblay, A. (Forthcoming), "Employee Flexibility, Exogenous Risk, and Firm Value", Journal of Financial and Quantitative Analysis.
We hypothesize that employee flexibility enhances firm value by helping firms respond to exogenous shocks. We estimate employee flexibility scores through textual analysis of online job reviews, and find a high flexibility score leads to superior stock returns for firms exposed to external risk. During 2011-2017, the value-weighted hedge portfolio formed on employee flexibility earned a five-factor annualized alpha of 9.5% during periods of high policy uncertainty. Earnings announcement returns also suggest that investors do not fully value workforce flexibility. These results indicate that employee flexibility is a valuable corporate intangible that helps firms to manage risk during uncertain times.
Project Title Role Award Amount Year Awarded Granting Agency Project TitleDoes Management Earnings Guidance Benefit Shareholders? RolePrincipal Co-Investigator Award Amount$47,115.00 Year Awarded2013-2015 Granting AgencySocial Sciences and Humanities Research Council of Canada Insight Development Research Grant Project TitleRationalize the Irrationality: Diffusion of Misvaluation through Economic Links RoleCo-Investigator Award Amount$52,125.00 Year Awarded2013-2016 Granting AgencySocial Sciences and Humanities Research Council of Canada Insight Grant Project Title RoleCo-Investigator Award Amount$ Year Awarded2013 Granting AgencyNational Center for the Middle Market Research Grant, USA Project TitleDivergence of Opinion, Overvaluation, and Equity Issuances RolePrincipal Investigator Award Amount$64,000.00 Year Awarded2009-2012 Granting AgencySocial Sciences and Humanities Research Council - Standard Research Grant Project TitleWhy Companies Issue Convertible Bonds: Evidence from the Canadian Market RoleCo-Investigator Award Amount$68,700.00 Year Awarded2005-2008 Granting AgencySocial Sciences and Humanities Research Council - Standard Research Grant Project TitleBehavioural finance: Does stock market misvaluation influence managerial and investor decisions RolePrincipal Investigator Award Amount$54,166.00 Year Awarded2003-2006 Granting AgencySocial Sciences and Humanities Research Council - Standard Research Grant Project Title RolePrincipal Investigator Award Amount$ Year Awarded2003 Granting AgencyDutch Science Foundation, the Netherlands Project Title RolePrincipal Investigator Award Amount$ Year Awarded2003 Granting AgencyCertified Financial Planners Board of Standards Grant, USA - Research Grant Program Project Title RolePrincipal Investigator Award Amount$ Year Awarded2002 Granting AgencyYork University - Research Grant Project Title RolePrincipal Investigator Award Amount$ Year Awarded2000 Granting AgencyFisher College of Business, Ohio State University - Travel Award to the AFA