【Talk&Lecture】No. 131 Reporter: Zhan Xintong (The Chinese University of Hongkong)：Options trading and debt structure
Date: 18th November, 2019
Time: 14:00 – 16:00 p.m.
Venue: Room236, International Business and Economics Building, Yuquan Campus, Zhejiang University.
【Speaker Introduction】：Prof. Xintong (Eunice) Zhan is an Assistant Professor of Finance and Real Estate at The Chinese University of Hong Kong (CUHK). She received her Ph.D. in Finance from The Chinese University of Hong Kong in 2016 and B.A. in Finance from Guanghua School of Management, Peking University in 2012. Prof. Zhan’s research focuses on return predictability, stock crashes, and sustainable and responsible investing. Her work has been presented at leading finance conferences such as American Finance Association Annual Meeting, Western Finance Association Annual Meeting, and European Finance Association Annual Meeting. She has published multiple papers in Management Science. Prof. Zhan has also presented to industry professionals such as Morgan Stanley, Cubit Systemic Trading, Two Sigma, and the Chicago Quantitative Alliance, and provided consulting services to start-up fintech companies and boutique equity advisory.
【Lecture Introduction】：Options trading activity can enhance informational efficiency of underlying securities by helping to complete markets and by stimulating information production that leads to informed trades. Recent empirical studies find evidence suggesting that enhanced informational efficiency from options trading translates into higher firm values by allowing for a more efficient allocation of firm resources. In this paper, we develop and test the hypothesis that, in addition to a more efficient allocation of firm resources, options trading also enhances firm value through a financing channel, by promoting a debt structure that relies more on public debt and less on more costly bank financing. Consistent with both an information channel (where increased informational efficiency reduces the demand for the superior ability of banks to access and process private information) and a governance channel (where enhanced informational efficiency reduces the demand for bank lender governance) we find that bank loan issuance and the ratio of bank loans to total debt are negatively related to option listing and options trading volume.
