Research | Wenxuan Sun

Job Market Paper

Silencing Salary Talk: How Salary History Bans Affect Corporate Investment and Performance

with Matthew Serfling

Presentations

2026 Eastern Finance Association Annual Meeting
2025 Financial Management Association Annual Meeting
2025 Southern Finance Association Annual Meeting

Abstract

We study how firms’ access to labor-market information affects investment and performance. To do so, we exploit salary history bans (SHBs), which restrict employers from asking applicants about prior pay, as shocks that remove a low-cost but potentially imperfect signal of worker productivity and expected labor costs. Using staggered SHB adoption in a difference-in-differences design, we find that firms reduce capital expenditures and R&D while improving investment efficiency. Productivity, profitability, and firm value rise in the short-to-medium run, though these gains attenuate over time, consistent with persistently lower investment eventually constraining growth capacity. Additional findings suggest that SHBs create an input-information tradeoff: removing salary history raises uncertainty about future labor costs and match quality, discouraging irreversible investment, but also reduces reliance on an informative but imperfect signal, leading firms to make more disciplined hiring and capital-allocation decisions.

Paper and slides forthcoming

Working Papers

Tax Incentives and Unexpected Investment Responses: Evidence from ERTA

Abstract

This paper studies how firms allocate investment when tax policy simultaneously changes incentives for physical capital and R&D. The Economic Recovery Tax Act of 1981 (ERTA) provides a useful setting because it accelerated depreciation deductions for physical capital while introducing the first federal incremental R&D tax credit. Whereas prior research typically studies these investment margins separately, I examine how firms adjust them jointly. To address the challenge that ERTA was a nationwide reform implemented amid large macroeconomic changes, I construct predetermined cross-sectional exposure to its capital provisions. Using historical tax law and the 1977 BEA Capital Flow Table, I measure industry-level changes in depreciation benefits and map them to firms using historical industry assignments and pre-reform capital intensity. This design provides firm-level evidence on whether tax incentives expand physical capital and R&D together or induce reallocation across the two margins.

Paper and slides forthcoming

The Role of IP Protection Statutes in Shaping M&A Target Choices

with Zhengzhuo Li

Presentations

2026 Southwestern Finance Association Annual Meeting
2025 Financial Management Association Annual Meeting
2025 Southern Finance Association Annual Meeting

Abstract

We examine how employee intellectual property (IP) protections affect acquisition activity and innovation. Exploiting the staggered adoption of state statutes that limit employers’ claims over independently developed employee inventions, we find that adopting firms become less likely to be acquired and state-level acquisition activity declines. The effect is stronger among innovation-intensive firms, consistent with reduced acquirer control over future employee-generated ideas. Firms reduce R&D after adoption, while patent counts, citations, patent values, and inventor inflows increase. Acquirers also experience lower long-run abnormal returns. Overall, stronger employee IP rights reshape innovation incentives, firm boundaries, and the market for corporate control.

Paper and slides forthcoming

Work in Progress

Acquisition Announcement Returns and Deal Quality

with Tingting Liu and Danni Tu