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Xuan Tian - Indiana University, Kelley School of Business. Bloomington, IN, US

Xuan Tian Xuan Tian

Professor of Finance | Indiana University, Kelley School of Business

Bloomington, IN, UNITED STATES

Dr. Xuan Tian research is based in the areas of corporate finance and financial intermediation, venture capital, and private equity.

Secondary Titles (1)

  • Mary Jane Geyer Cain Faculty Fellow





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Dr. Xuan Tian is an Associate Professor of Finance and Mary Jane Geyer Cain Faculty Fellow at the Kelley School of Business at Indiana University. He is an award winning researcher in the areas of corporate finance and financial intermediation with special research interests on venture capital, private equity, and corporate innovation. His research has been published in leading academic journals including the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies. His single-authored article “The Causes and Consequences of Venture Capital Stage Financing” won the 2011 Jensen Prize (2nd place) for best paper published in the areas of corporate finance and organizations in the Journal of Financial Economics. His article “Disciplining Delegated Monitors: The Consequences of Preventing Fraud” won the Best Paper Award in Financial Markets and Institutions at the 2012 Financial Management Association (FMA) meetings. Dr. Tian won the Kelley School of Business Research Excellence Award (Assistant Professor Level) in 2012. Dr. Tian’s research has been presented at numerous university workshops and academic conferences such as the National Bureau of Economic Research (NBER) meetings, the Western Finance Association (WFA) meetings, the American Finance Association (AFA) meetings, and the American Economic Association (AEA) meetings. Dr. Tian received his Ph.D. from Boston College in 2008 and his B.A. from Beijing University, China, in 2001.

Industry Expertise (4)



Financial Services


Areas of Expertise (6)

Corporate Finance

Venture Capital



Financial Development


Accomplishments (1)

John L. Weinberg Corporate Governance Best Paper Award (professional)

This award was presented at the Corporate Governance Symposium.

Education (3)

Boston College: Ph.D., Finance 2008

University of Washington: M.A., Economics 2003

Beijing (Peking) University: B.A., Economics 2001

Articles (5)

Does Banking Competition Affect Innovation?

Journal of Financial Economics

2015 We exploit the deregulation of interstate bank branching laws to test whether banking competition affects innovation. We find robust evidence that banking competition reduces state-level innovation by public corporations headquartered within deregulating states. Innovation increases among private firms that are dependent on external finance and that have limited access to credit from local banks. We argue that banking competition enables small, innovative firms to secure financing instead of being acquired by public corporations. Therefore, banking competition reduces the supply of innovative targets, which reduces the portion of state-level innovation attributable to public corporations. Overall, these results shed light on the real effects of banking competition and the determinants of innovation.

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Does Stock Liquidity Enhance or Impede Firm Innovation?

The Journal of Finance

2014 We aim to tackle the longstanding debate on whether stock liquidity enhances or impedes firm innovation. This topic is of interest because innovation is crucial for firm- and national-level competitiveness and stock liquidity can be altered by financial market regulations. Using a difference-in-differences approach that relies on the exogenous variation in liquidity generated by regulatory changes, we find that an increase in liquidity causes a reduction in future innovation. We identify two possible mechanisms through which liquidity impedes innovation: increased exposure to hostile takeovers and higher presence of institutional investors who do not actively gather information or monitor.

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Financial Development and Innovation: Cross-country Evidence

Journal of Financial Economics

2014 We examine how financial market development affects technological innovation. Using a large data set that includes 32 developed and emerging countries and a fixed effects identification strategy, we identify economic mechanisms through which the development of equity markets and credit markets affects technological innovation. We show that industries that are more dependent on external finance and that are more high-tech intensive exhibit a disproportionally higher innovation level in countries with better developed equity markets. However, the development of credit markets appears to discourage innovation in industries with these characteristics. Our paper provides new insights into the real effects of financial market development on the economy.

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The Dark Side of Analyst Coverage: The Case of Innovation

Journal of Financial Economics

2013 We examine the effects of financial analysts on the real economy in the case of innovation. Our baseline results show that firms covered by a larger number of analysts generate fewer patents and patents with lower impact. To establish causality, we use a difference-in-differences approach that relies on the variation generated by multiple exogenous shocks to analyst coverage, as well as an instrumental variable approach. Our identification strategies suggest a negative causal effect of analyst coverage on firm innovation. The evidence is consistent with the hypothesis that analysts exert too much pressure on managers to meet short-term goals, impeding firms' investment in long-term innovative projects. We further discuss possible underlying mechanisms through which analysts impede innovation and show that there is a residual effect of analysts on innovation even after controlling for these mechanisms. Our paper offers novel evidence on a previously under-explored adverse consequence of analyst coverage—its hindrance to firm innovation.

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Tolerance for Failure and Corporate Innovation

The Review of Financial Studies

2011 Based on a sample of venture capital (VC)-backed IPO firms, we examine whether tolerance for failure spurs corporate innovation. We develop a novel measure of VC investors' failure tolerance by examining their willingness to continue investing in underperforming ventures. We find that IPO firms backed by more failure-tolerant VC investors are significantly more innovative and VC failure tolerance is particularly important for ventures that are subject to high failure risk. We show that these results are not driven by endogenous matching between failure-tolerant VC firms and start-ups with high ex ante innovative potential. We also examine the determinants of the cross-sectional heterogeneity in a VC firm's failure tolerance. We find that both capital constraints and career concerns can negatively distort a VC firm's failure tolerance. Less experienced VC firms are more exposed to these distortions, making them less failure tolerant than are more established VC firms.

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