Ms Kieu-Trang Nguyen

Ms Kieu-Trang Nguyen

PhD Candidate in Economics

Department of Economics

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Research interests
Labor Economics, Organizational Economics (primary)
Economics of Innovation, Applied Microeconomics, Corporate Finance (secondary)

Job market paper
Trust and Innovation within the Firm: Evidence from Matched CEO-Firm Data

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This paper provides evidence on the effect of trust on innovation within firms. I build a new matched CEO-firm-patent dataset covering 5,753 CEOs in 3,598 large US public firms and 700,000 patents during 2000-2011. To identify the effect of CEO's trust, I exploit variation in generalized trust across the countries of CEOs' ancestry, inferred from their last names using de-anonymized historical censuses, as well as variation in CEOs' bilateral trust towards inventors. First, one standard deviation increase in CEO's generalized trust following a CEO turnover is associated with over 6% increase in firm’s future patents. Second, changes in CEO's bilateral trust towards inventors in different countries (i.e., different R&D labs within multinational firms) or from different ethnic origins in the same firm have comparable effects on inventors' patenting, controlling for CEO and other stringent fixed effects. Trust-induced improvements in innovation are driven entirely by higher-quality patents, consistent with a model in which CEO’s trust incentivizes researchers to undertake high-risk explorative R&D. Finally, I show that across and within firms, CEO's generalized trust is strongly correlated with a broader corporate culture of trust, as measured from the text analysis of one million online employee reviews. The evidence provides a micro-foundation for the well-known macro relationship between trust and growth.

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Publications and additional papers


“One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime” (with Quoc-Anh Do and Anh N. Tran), 2017, American Economic Journal: Applied Economics, vol. 9(4), pp. 1-29. Lead Article.
Abstract: We study patronage politics in authoritarian Vietnam, using an exhaustive panel of ranking officials from 2000 to 2010 to estimate their promotions’ impact on infrastructure in their hometowns of patrilineal ancestry. Native officials’ promotions lead to a broad range of hometown infrastructure improvement. Hometown favoritism is pervasive across all ranks, even among officials without budget authority, except among elected legislators. Favors are narrowly targeted toward small communes that have no political power, and are strengthened with bad local governance and strong local family values. The evidence suggests a likely motive of social preferences for hometown.
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Working Papers:

“Do tax incentives for research increase firm innovation? An RD Design for R&D” (with Antoine Dechezleprêtre, Elias Einiö, Ralf Martin, and John Van Reenen)
Abstract: We present evidence of causal impacts of research and development (R&D) tax incentives on own-firm innovation and technological spillovers. Exploiting a change in the asset-based size thresholds that determine eligibility for R&D tax subsidies we implement a Regression Discontinuity Design using administrative tax data. There are statistically and economically significant effects of tax on R&D and (quality-adjusted) patenting that persist up to 7 years after the change. R&D tax price elasticities are large, with a lower bound of 1.1, consistent with the fact that the treated group is drawn from smaller firms that we show are more likely subject to financial constraints. Our RD design has power to identify positive spillovers on technologically-close peers, when these neighbors are in a sufficiently small technology class with the treated firms.
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“Privatization and Productivity of Upstream Industries: Firm and Industry Level Evidence from Vietnam”
Abstract: This paper shows that from 2001 to 2008, the gradual privatization program in Vietnam has strong positive spillovers on firms' total factor productivity through backward linkages. A firm gains on average 4 percentage points in TFP if private firms in all of its downstream industries increase their market share by 10%. This effect comes mainly from privatized domestic firms within local markets. It is stronger for upstream industries under more competition from imports, and weaker for those that export more. The effect on allocative efficiency is imprecisely negative and mitigates the overall effect on industry TFP index, as new entrants but not incumbents capture very large gains in TFP. I present evidence that the effect works through elevated pressure from privatized client firms. Furthermore, the spillovers are stronger when provincial institutions favor state-owned firms and create higher entry costs, suggesting that good governance and privatization spillovers are substitutes.
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“Less Favoritism from Higher Office? Evidence from Close Congress Elections and Politically Connected Firms” (with Quoc-Anh Do, Yen-Teik Lee, and Bang Dang Nguyen)
Abstract: This paper shows that (i) social-network based connections with politicians have large financial impacts on firms, and (ii) they may decrease as the politician gets elected to higher office. Focusing on state-level politicians contesting in close U.S. Congress elections from 2000 to 2008, and their former classmates currently holding directorships at listed firms, we find that election success reduces friend’s firm’s value by 3.24% within a week. The effect is stronger in more corrupt states, and among stronger connections. It is consistent with the prediction that congressmen are under stronger scrutiny, and therefore unable to provide as much favoritism as prominent politicians in State politics. Our RDD’s cross-sectional identification is still valid even when the market wrongly predicts election probabilities.
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Placement Officer
Professor Mark Schankerman 

Professor John Van Reenen
Professor Oriana Bandiera

Associate Professor Catherine Thomas

Professor John Van Reenen
Professor Oriana Bandiera
Associate Professor Catherine Thomas
Professor Robert Gibbons


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Department of Economics,
London School of Economics and Political Science,
Houghton Street, London WC2A 2AE