“When I decided to study finance, many people tried to persuade me to give up that idea. They told me I would not find a job,” says Chun Chang. Had the professor taken the advice of his family and friends some 30 years ago, it would have been a great loss to China’s financial sector and, indeed, to the international finance community. As it turned out, Prof. Chang not only secured an impressive job after graduation, but also became the first mainland Chinese to teach finance at a U.S. university.

In fact, a look at Chang’s curriculum vitae shows many “firsts.” When he enrolled at University of Oregon to study mathematics in 1981, Chang became one of the earliest mainland Chinese to study abroad following the nation’s opening to the outside world. Later, when he began teaching finance at University of Minnesota’s Carlson School of Management, Chang also became the first mainland Chinese finance scholar to receive tenure at a U.S. university. In a telling change of the times, in 2006, Chang again broke new ground as the first mainlander to give up a tenured position in the West to return China. Later that year, Chang became CEIBS’ first full-time professor in Finance.

Behind his warm but humble personality and his boyish looks, Prof. Chang’s pioneering spirit, his ambitious academic goals, and his world-class research make him an invaluable asset to CEIBS. In addition to his role as the school’s most senior finance professor, he also serves as the school’s ABN AMRO Chair Professor of Risk Management, Member of the Academic Council, and Subject Area Coordinator for Finance and Accounting. During his 20-year academic career, Chang has contributed greatly to the development of theories in the fields of contracts and corporate finance. His research findings on corporate finance and contract theory have appeared in the most authoritative international journals and textbooks. Today, Chang is regarded as China’s top finance scholar, and is renowned in the field worldwide. 

Riding the reform wave

In many ways, the story of Chang’s career parallels the drama of China’s overall opening and economic reform. As a member of the generation that entered university just following the Cultural Revolution (1966-1976), Chang avoided coming of age at a time when schools were closed and study was regarded as useless. Like his peers, he was eager for knowledge and for opportunities to see the outside world. He made the most of that chance in 1981, when he was accepted at University of Oregon and began a 20-year stint in studying and teaching. Having majored in mathematics in China, he continued in this field for his undergraduate and master’s degrees. However, Chang’s passion is not confined to the mathematics field. Since childhood, he has shown a great interest in sociology, especially in the use of mathematics methodology to analyze social issues. Finance seemed a perfect combination of these two interests. In 1987, Chang was accepted into Northwestern University’s Kellogg School of Management to pursue a Ph.D. in Managerial Economics and Decision Sciences.

Personal interest is not the only factor pushing Chang to eventually focus on finance. In the 1980s, finance was considered a strange and remote field in China ? a country that had adopted a state-controlled planned economic system for more than 30 years. Still, Chang foresaw the important role finance would eventually play in China’s future economic development. Thus, he stuck with his decision despite the warning of family and friends ? a choice that soon proved beneficial for himself, and for his profession.

Into the research realm

International academic circles have also benefited from Chang’s decision to follow his heart. Over the past two decades, his research has broken ground in three main areas: corporate finance, commercial banking, and human resource investment.

In the area of corporate finance, Prof. Chang’s work has covered mainly corporate capital structure theory. He has studied optimum financing methods for enterprises and is seeking to measure the influence of different financial methods on a corporation’s value and its stakeholders. Chang has developed a theory which states that under certain circumstances, employees should be given the control rights of corporations. This is the first theory that rationalizes employee participation in corporate governance. In addition, he also proposed a theory of conglomerate mergers.

In the field of commercial banking, Chang has teamed with two American researchers to study the pros and cons of legally separating commercial banking activities and investment banking activities in financial industry. The three professors also published several reports discussing the impact of deposit insurance systems on the behavior of banks and enterprises. This research brings practical recommendations for American banks in their shift from separate business to multiple businesses. The findings are also useful in the future development of the Chinese banking system and the establishment of deposit insurance system. In recent years, Chang has extended his research to a theoretical and empirical study on loan granting among commercial banks in China ? addressing the country’s serious problems with non-performing loans.

Turning to the field of HR, in the mid 19890s, Chang and Professor Wang Yijiang co-published their research results concerning human capital investment under the condition of unsymmetrical information. The findings were generally recognized as “pioneering” by the scholars of labor economics.  (For a full listing of Prof. Chang’s publishing record, see sidebar, “Proven in Print.”)

CEIBS’ new finance focus

When Chang began teaching EMBA finance cources in China in 2002, the concepts and theories he introduced were regarded by domestic students as the stuff of fantasy. Since China’s financial markets were still largely closed, financial practices in China differed greatly from those of developed nations.

The situation has changed dramatically since 2005, with the opening of China’s financial sector. Financial concepts that were once considered irrelevant by Chinese executives - such as stock options, IPO, risk management, investment strategies - have now gained acceptance and importance. As the industry has liberalized, tables have turned and Chinese executives are now eager to understand and use financial concepts.

As CEIBS’ first Finance faculty member, Chang has been influential from the start in building the school’s capabilities in this critical field. Today, CEIBS has attracted nine full-time finance professors, making finance the strongest discipline at CEIBS. Meanwhile, Chang tutors finance PhD students in Tsinghua University and Shanghai Jiaotong University as an adjunct professor.

What is next for Prof. Chang? This year, he is helping CEIBS to significantly expand and strengthen its finance offerings. In April 2007, CEIBS and Shanghai Lujiazui (Group) founded the CEIBS Lujiazui International Finance Research Centre. The center will support the efforts of the Chinese government to build Shanghai into a regional financial hub. By offering advanced finance courses and programs, the center will serve as an authoritative and influential think tank for the city.

As CEIBS’ most senior finance expert, Chang Chun will lead the centre in providing world-class research, consulting and training services for government entities and financial institutions.

For Chang, launching the centre, with its goal of assisting in building Shanghai into a regional financial center, is a logical next move in his career, making his return to China all the more worthwhile. “China is now the fastest growing economy in the world. The outlook of China’s finance industry and finance education is rosy,” says Chang.

Does he regret giving up tenure in the West? Chang says “no.” He explains: “After getting tenure in a U.S. university, your life and career are usually predictable - not many new challenges.” By contrast, returning to China has made Chang a pioneer in his field, and CEIBS provided the right environment for him to blaze new trails. “CEIBS gave me another reason to return to China,” he says. The school’s focus on research and its teaching environment also persuaded him. “CEIBS is a real international business school; that is very important for a researcher.” In his typically humble style, Chang sums up the factors motivating his new career focus in China.  “There are many things to do: research, teaching, interaction with companies and government,” he says. “This is very challenging and exciting.”

During his 20-year academic career, the byline “Chun Chang” has become well known among the world’s top international finance journals. Prof. Chang has published his research findings in such publications as Journal of Finance, Review of Financial Studies, Journal of Monetary Economics, Journal of Economic Theory, Journal of Labor Economics and Journal of Business.

In 2004, he also began serving as editor-in-chief of the Chinese Economics Review, the most authoritative international academic journal specifically studying China’s economy.

Prof. Chang’s published books include:  

• Corporate Finance for Chinese Entrepreneurs (Peking University Press, 2006) ? A practical Chinese-language publication based on Chang’s Executive MBA teaching experiences over the past several years in China, this book stands out for its unique Q&A structure, resulting in a straightforward, reader-friendly method of conveying complex finance knowledge. Many of the questions used in the book were raised by real life CEIBS EMBA students in Chang’s class.
• The Theory of Corporate Finance (Princeton University Press, 2006) ? Authored by Economics Professor Jean Tirole, this book refers frequently to Prof. Chang’s key research achievements. The book is widely considered the best textbook for PhD students of corporate finance worldwide.
• Advanced Corporate Finance: Theories and Evidence ? Set to publish this October by Remin University Press publishing, this Chinese-language work is oriented toward researchers and postgraduate students of Finance. The book incorporates findings from Prof. Chang’s years of theoretical and empirical study in China, while drawing upon his two decades of accumulated expertise in the field of corporate finance. If the Chinese edition is well received, Chang plans to translate the work into English. This could well bring a welcomed addition to the textbooks used for PhD Finance studies.

Other articles published in key industry journals include:

• “Investment Opportunities, Liquidity Premiums and Conglomerate Mergers” (co-authored with Xiaoyun Yu), Journal of Business，(2004).
• “Deposit Insurance: A Reconsideration” (co-authored with John Boyd and Bruce Smith), Journal of Monetary Economics, (2002).
• "Human Capital Investment under Asymmetric Information: the Pigovian Conjecture Revisited" (coauthored with Yijiang Wang), Journal of Labor Economics, (1996).
• "Payout Policy, Capital Structure, and Compensation Contracts when Managers Value  Control," Review of Financial Studies, 1993.
• "Capital Structure as an Optimal Contract between Employees and Investors," Journal of Finance, (July 1992).
• "The Dynamic Structure of Optimal Debt Contracts," Journal of Economic Theory, (October, 1990).