Rachel Xi Zhang

Rachel  Xi Zhang

Contact Information

  • office Address:

    1360 Steinberg Hall - Dietrich Hall
    3620 Locust Walk
    Philadelphia, PA 19104-6365


Rachel’s research interest involves studying how information is produced by and transmitted among key corporate stakeholders (e.g., between shareholders and managers, boards of directors and managers, and among capital providers, including institutional investors and creditors). Her work currently includes topics related to institutional investors, governance and incentives, financial disclosure and capital markets.

Rachel received a B.S. in Economics from the Wharton School, University of Pennsylvania. Prior to pursuing her Ph.D. degree, she was an investment banking analyst at Goldman Sachs.

Continue Reading


  • Christopher Armstrong, Luzi Hail, Rachel Xi Zhang, Executive Compensation Contracts in the Presence of Adverse Selection.

    Abstract: We develop three complementary tests to examine how adverse selection affects the design of executive compensation contracts: First, we show that externally-hired CEOs receive higher total pay and have fewer equity incentives relative to internally-promoted CEOs, consistent with their ability to extract larger information rents due to greater private information. These differences are more pronounced when less is known about the prospective CEO, but quickly dissipate over time. Second, we show that external CEOs’ initial contracts differ more from those of their firm’s incumbent senior managers than do those of internal CEOs—particularly in terms of accounting performance metrics and equity-based pay, in line with the use of these features to elicit private information. Third, we find that following an unanticipated change in option vesting schedules prompted by SFAS 123R, newly appointed executives do not increase their option exercises and share sales—despite their newfound ability to do so—while longer-tenured executives do, consistent with contracts initially being designed to screen for certain types of managers before shifting to encourage certain behaviors. Combined, our evidence supports the distinct role of adverse selection in the design of executive compensation contracts.    

  • Rachel Xi Zhang, Do Managers Learn from Institutional Investors through Direct Interactions?.

    Abstract: Prior evidence suggests that managers learn indirectly from stock prices, which contain private information impounded by informed investors’ trades. However, stock price is an indirect aggregate signal, which is likely to be insufficient for managerial learning. I propose that managers seek out direct interactions with institutional investors as a further mechanism to learn relevant information about their firms. Using investor conferences and investor days as the medium for direct learning, I find that managers seek more direct interactions when they have a high demand for information concerning industry trends and supply chain dynamics, and when they expect their current base of institutional investors to be knowledgeable. I also predict that information learned through direct interactions will be reflected in the manager’s subsequent corporate and personal decisions. I find that the frequency and accuracy of management forecasts increase after direct learning. Comparing insider trades in the same firm-month, trades executed by participating insiders within seven days after a conference earn greater positive abnormal returns, consistent with managers’ information set expanding as a result of their direct learning.


Past Courses


    Strategic Cost Analysis is the process of analyzing and managing costs in orderto improve the strategic position of the business. This goal can be accomplished by having a thorough understanding of which activities and costs support an organization's strategic position and which activities and costs either weaken it or have no impact. Subsequent cost management efforts can then focus on reducing or limiting expenditures on activities that add little or no strategic value, while increasing expenditures on activities that support the strategic position of the organization. Performance can then be evaluated to ensure that the chosen actions are taken, and that these actions are yielding improved strategic performance. Throughout the course, a strategic cost analysis and management framework will be applied across functions and organizations to highlight the cost analysis and performance evaluation methods available to forecast financial performance and improve strategic position.


Latest Research

Christopher Armstrong, Luzi Hail, Rachel Xi Zhang, Executive Compensation Contracts in the Presence of Adverse Selection.
All Research