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HKUST 2015-2016 Annual Report
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Bubble, Bubble
Asset bubbles often generate significant interest
and heated public debate, but their causes and
consequences have been little explored in rigorous
academic studies. Recent joint work on the
macroeconomic implications of bubbles and crashes
by Prof Pengfei Wang (Economics) and coauthors
has been helping to fill this gap. Through their
studies, the researchers have estimated that bubbles
explain more than 90% of stock market volatility and
about 25%-45% of the variation in investment and
output in the US, contributing timely knowledge
to an area spotlighted by the recent financial crisis.
Related papers have been published in Journal
of Monetary Economics, Quantitative Economics,
Journal of Economics Theory, and Journal of
Mathematical Economics, among others.
Higher Taxes, Lower Innovation
Many policy-makers argue for higher corporate
taxes to reduce inequality. Simultaneously, there
is a strong demand for policies that make domestic
firms more innovative. Are these objectives
contradictory? Will higher corporate taxes reduce
innovation? Prof Abhiroop Mukherjee (Finance),
Prof Alminas Žaldokas (Finance) and Manpreet
Singh (then PhD student, Finance) examined this
issue in a paper, “Do Corporate Taxes Hinder
Innovation”, and found that higher corporate taxes
did reduce R&D investment, patenting, as well as
new product innovation by firms. The paper was
recently discussed by former US presidential
economic advisors at an academic discussion
at the National Bureau of Economic Research’s
SummerInstituteinBoston,andissettobepublished
in Journal of Financial Economics.
Deterring Cybercrime
Prof Kai Lung Hui (Information Systems, Business
Statistics and Operations Management) has found
that enforcing the Convention on Cybercrime
can reduce random spoof-source DDOS attacks
against targets within enforcing countries by
at least 11.8%. The Convention is an international
initiative spearheaded by the Council of Europe
and implemented by more than 40 countries.
The effect of such enforcement increases with
the number of participating countries, but diverts
attacks to non-participating countries. Prof Hui’s
research demonstrates the effectiveness of law
enforcement and highlights the importance of
international collaboration in deterring cybercrime,
which causes significant loss to the world economy.
A research paper is forthcoming in MIS Quarterly.
Tracking Impact
of Advertising Images
Prof Rashmi Adaval (Marketing) and colleagues
examined the effects of mental imagery. Using
laboratory experiments, they showed that when
people try to imagine an experience in the form
of a story (for example, a visit to an advertised
resort), mental images formed from different visual
perspectives increased difficulty in processing
and hurt evaluations. These same images had a
more positive effect on evaluations when people
imagined they were collecting information. Eye-
tracking data, used to validate these conclusions,
suggested consumers’ imagery goals when looking
at advertising images make a difference in the
impact these images have. The paper has been
published in Journal of Consumer Research.
Reaching Out through Writing
Prof Yan Lianke (Humanities), Sin Wai Kin Visiting
Professor of Chinese Culture, completed Twelve
Lectures on World Literature in the 19th Century.
The book is based on his HKUST creative writing
course lectures and will be published by Beijing
Xinjingdian Chubanshe. His fictional work, The
Dying Sun was published by Taibei: Maitian in 2016.
He was shortlisted for the 2015 Newman Prize for
Chinese Literature, 2016 Man Booker International
Prize, and won Hong Kong Baptist University’s 6th
Dream of the Red Chamber Award in 2016.
Ethnic Group Socialization
Psychology researcher Prof Eva Chen (Social
Science) examined the impact of ethnic group
membership on how children in Hong Kong learn
from and socialize with others. Such experiences
in childhood are crucial in the later formation of
identity and preferences. Findings indicated that
Hong Kong Chinese pre-primary school children
can differentiate between various ethnic groups,
showing a robust inclination to learn from and
socialize with members of their ethnic ingroup
(Chinese) over outgroup (white, Southeast Asian)
members. The strength of children’s sensitivity and
preferences was impacted by specific outgroup
ethnicities, the presence of Southeast Asian
domestic workers at home, and the type of school
attended. The research received support from
the Hong Kong Research Grants Council Early
Career Scheme.
