Numbers talk to Shihong Li. An assistant professor of accounting at the Anderson Schools, Li spent several years in the world of international banking in China, where she was born, raised and received her bachelor’s degree. She came to the United States to complete her formal education and is now spending time in the world of academia at the University of New Mexico.
Li teaches intermediate accounting to undergraduate and graduate students, but her interest in accounting pushes her toward research that analyzes how people react to numbers. Her dissertation from the University of Houston dealt with debt contracting. She is now working on a followup paper to her dissertation that examines how capital market analysts react to the accounting numbers that are released quarterly by publicly-owned companies.
She works with the DealScan database to explore big syndicated loans to companies. Syndicated loans are jointly given by several lenders who share the risk involved with lending very large amounts of money. Li is interested in how accounting reports affect this process.
“Say you have to keep your net worth up to a certain level. You have to keep your profit ratio at a certain level. There are definite parameters,” she said. “I can look at a company that happens to have syndicated loans. Say they report in a certain way. I want to see how the banks respond, whether the lenders care about how they report.”
In another line of research, she and a colleague at the University of Houston are working on a paper that examines whether companies that lobby on tax issues succeed in lowering their tax rate. She said, “In other words if you spend money lobbying today, will you have lower tax rates tomorrow? That seems plausible to lots of people. But on average, we just do not see that.”
They found that many companies who pay lobbyists to work on tax issues already have fairly low tax rates. Much of the time and effort is spent to make sure the companies maintain the rate they already enjoy. Her latest paper has been conditionally accepted by the Journal of the American Taxation Association. She is now working with her collaborator on minor revisions.
Li has just completed her first semester teaching at UNM and she is already revising her approach. She says she will make it much clearer to her accounting students just how much time and effort is needed to really master the material they need to learn. She wants them to get as much as possible from the course, a process that will require their careful attention.
Li brought her husband and son to New Mexico with her. Her son attends AIMS High School on the UNM south campus. She said they are quickly adjusting to New Mexico. She was attracted to a position at Anderson School because of the opportunity for faculty members to conduct research. Her own work is in the field of archival research where she is able to look at published data for new patterns and insights into the way numbers impact the behavior of people.