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This paper uses the bibliometric method of knowledge mapping analysis to clearly present the knowledge base and research fronts of cross-market volatility spillovers. The results provide strong evidence that, first, the general theme of volatility spillovers can be divided into a variety of research topics, four of which are on the dynamics of volatility spillovers in world financial markets of various types based on multivariate GARCH or VAR models and construct a crucial knowledge base for this field; second, three research fronts can be identified using burst analysis, and they focus on examining spillover directions and magnitudes, testing volatility spillovers related to oil markets and international risk transmission mechanism of emerging markets; and, third, the major contributing scholars come from institutions in the United States,China and European economies. Our conclusions offer some recommendations for market practitioners in their risk management and policy-making. [ABSTRACT FROM AUTHOR]

Innovation plays a vital role in economic development. This paper examined the effect of state ownership on firm innovation as well as the moderating roles of R&D capability and marketization by Chinese firm-level data from Chinese Industrial Enterprises (2008–2011) and listed companies (2007–2016). The theoretical and empirical study verified that state ownership positively influences firm innovation, and firm's R&D capability and the degree of marketization have significant positive moderate effect. The result was robust in a series of checks such as using lagged data, adopting alternative identification methods and variables, and using independent replication. The conclusion provided implications for the management of Chinese firms. The unique innovation pattern of Chinese firms also provided enlightening experience to other emerging economies. [ABSTRACT FROM AUTHOR]

Using the data of China A-share listed firms from 2015 to 2019, we examine the effect of exchange inquiry letter regulation on stock price informativeness. It is found that the stock prices of inquired firms contain more firm-level information after the receipt of inquiry letter. Further research demonstrates that attracting investors' attention to more firm-specific information is the potential channel through which inquiry letters improve stock price informativeness. This paper provides empirical evidence for the effectiveness of exchange inquiry letter regulation, which has significant implications for listed firms improving information disclosure and for regulators playing a better role in emerging markets. [ABSTRACT FROM AUTHOR]

Using SZSE's disclosure rankings data, this paper studies the relation between firms' disclosure quality and stock mispricing in emerging markets. We find that higher disclosure ranking grades, the proxy for disclosure quality, is associated with less stock misvaluation in the sense that market price deviates less from its fundamental. We also investigate the variation in this relation across industries and time. Our results document that the association between disclosure ranking grades and stock misvaluation is stronger for firms in more competitive industries. This finding suggests that higher disclosure ranking grades help draw more investors' attention, which will reinforce the role of corporate disclosure in reducing stock misvaluation. In addition, increase in disclosure ranking grades is more effective in reducing stock misvaluation in years prior to China's Split Share Structure Reform (SSSR), which is consistent with our conjecture that corporate disclosure is more valuable in promoting pricing efficiency when private information collection activities are less active. [ABSTRACT FROM AUTHOR]

This study explores the effectiveness of large shareholders' "voting with their feet," in motivating a listed company to alter its non-dividend payout behavior. We show that the split-share structure reform, which changed the company's shares held by controlling shareholders and other large shareholders from nontradable shares to tradable shares, gave large shareholders the ability to exit and therefore could inhibit this behavior. Furthermore, when a company has a higher ownership concentration of controlling shareholders and a lower quality of external auditing, the inhibitory effect is more significant. This paper considers China representative of emerging markets and suggests another way to manage the non-dividend payout behavior of listed companies in emerging markets. [ABSTRACT FROM AUTHOR]

The paper aims at extending previous research on the specific barriers experienced by emerging markets-based small- and medium-size enterprises (SMEs) expanding internationally and the necessary corporate resources and capabilities to support the first stages of their expansion. Framed within resource-based theory (RBV) and liability of foreignness perspectives, the study focuses on four main areas: limited knowledge of external markets, socio-cultural differences, unfamiliarity with foreign contexts and business practices, and limited local business contacts, reliable representatives, and control systems. The data were collected from more than 500 Chinese SMEs and then analyzed using multivariate and stepwise regressions. The research results show that external factors, both at the domestic level and in host markets, ranging from local regulations and distribution facilities to cultural differences and exchange rates, are perceived to be critical for the performance of business expansion. The research provides deep insights on the barriers faced by SMEs from emerging economies when doing business abroad and especially to discriminate among its different sources of liabilities. The results also suggest that the RBV approach is insufficient to analyze the barriers associated with liabilities of foreignness, newness, and outsidership. [ABSTRACT FROM AUTHOR]

Green development is an essential requirement for the high-quality development. In the context of the new round of technological revolution, the digital economy has injected new momentum into China's high-quality economic development. This article aims to clarify the relationships among digital economy, green innovation, and green development using Westerlund and Edgerton (2007) cointegration test as well as pooled mean group (PMG) estimation and utilizing yearly data from 274 cities in China from 2011 to 2019. Overall, the results confirm the existence of cointegration relationships between green development and green innovation, between green development and digital economy, as well as between digital economy and green innovation, and support that digital economy and green innovation can affect the green development in the long-term positively. Additionally, while digital economy positively affects the green development in the short-run, green innovation cannot affect the green development. Furthermore, while the long-run positive impact of digital economy and green innovation on green development is generally established among eastern, central, and western regions, the short-run impact of such two factors on green innovation varies among different regions, seeing as both two variables exert no significant impact on green development in western region. Empirical findings offer important policy implications for the policymakers to attach more importance on the emerging economy model such as digital economy or green innovation, which can bring about long-term green development. [ABSTRACT FROM AUTHOR]

We examine the impact of digital transformation on a firm's ESG performance using data from listed firms in China. Leveraging the recent advances in textual analysis, we quantify the extent of a firm's digital transformation. The results show that digital transformation enhances a firm's ESG performance. Moreover, results remain robust after addressing endogeneity problems and several robustness tests. In addition, we validate potential mechanisms that the digital transformation mainly improves the ESG performance of firms by improving the level of environmental performance, corporate social responsibility, and corporate governance. To examine the economic consequence, we find that digital transformation gains more government subsidies and analysts' attention increasing the management's positive tone at the earnings communication conferences by improving the firm's ESG performance. Heterogeneity analysis suggests that the effect of digital transformation on ESG performance is stronger for firms in severely polluting industries and executives with information technology experience. [ABSTRACT FROM AUTHOR]

This paper assesses the sensitivity of consolidated corporate performance to two aspects of foreign direct investment (FDI): international involvement and target market selection. Empirical evidence from China-bound FDI by Taiwan's listed companies between 2000 and 2010 is summarized as follows. First, under the internalization of FDI, performance tends to rise with intensity of FDI activity. Second, profitability appears higher as FDI targets the export market outside China. Third, synergetic performance is created mainly through improved efficiency in resource management rather than increased sales, which indicates effective cost control is crucial for successful FDI in emerging markets such as China. [ABSTRACT FROM AUTHOR]

This paper explored and tested the risk-adjusted uncovered interest parity model to investigate the degree of capital mobility in the United States, Japan, the United Kingdom, and four East Asian emerging markets relative to China from January 1994 to July 2008. Evidence was found to strongly support our hypotheses; market risk was significant for capital flows in the Chinese capital market, while the relationship between returns and the appreciation rate of the exchange rate were divided between the Asian emerging markets and the developed economies, depending on the directions of capital flows. [ABSTRACT FROM AUTHOR]

This paper analyzes the impact of changes in the securities transaction tax (STT) rate on the local A-share market in China. We find that, on average, a 22-basis-point increase in the STT rate is associated with about a 28 percent drop in trading volume, and a 17-basis-point reduction in the STT rate is associated with about an 89 percent increase in trading volume in the Chinese A-share market. Both increases and reductions in the STT rate result in significant increases in market volatility. In addition, increases in the STT rate have mixed effects on market efficiency, either improving or curbing it. Reductions usually either make the market less efficient or have no effect on it. The empirical results show that levying the STT on trading is not an effective tool to regulate the stock market, at least not in this emerging market. [ABSTRACT FROM AUTHOR]

This study examines the effect of Confucianism, an influential cultural belief and ethical philosophy in East Asia, on business strategy. Employing a large-scale archival dataset of Chinese public firms covering 2007 to 2020, we provide evidence that Confucianism is positively associated with analytical-oriented strategies. Our empirical findings remain intact after accounting for alternative Confucianism measures, controlling formal institutions and religions, instrumental variable methods, and other approaches to addressing endogeneity and robustness issues. Cross-sectional analyses further reveal that the documented effect is more evident for non-state-owned firms, firms with executives lacking overseas experience, and those operating in higher economic policy uncertainty. Overall, our study sheds light on how traditional culture, an important dimension of informal institutions, shapes corporate strategic decisions in emerging markets. [ABSTRACT FROM AUTHOR]

Using China's staggered intellectual property pilot and demonstration city (IPPDC) policy and the difference-in-differences method, this study assesses the effect of intellectual property (IP) protection on corporate innovation. The policy significantly stimulates corporate innovation investment and quality due to enhanced IP administrative enforcement after policy implementation. Financial innovation mitigates information asymmetry and negative spillovers, promoting treated firms' technological development. By substituting high-failure-tolerance institutional investors, IP pledge financing helps treated firms to fund innovation activities. This study reveals the IP protection effect on corporate innovation, providing insights for emerging economies to formulate public policies and finance systems to achieve innovation-driven development. [ABSTRACT FROM AUTHOR]

This paper examines the spillover effects of investor protection standards for interprovince mergers in China's emerging markets. Using a sample of 372 mergers, we find that if the provincial investor protection of the acquirer is better than that of the target, a privately owned acquirer will get significantly higher abnormal returns, whereas a local state-owned acquirer will not. Additional evidence indicates that in contrast to the crossborder acquirers or the private acquirers, the local state-owned acquirers in interprovince mergers come from provinces with worse fiscal conditions and prefer to acquire targets in provinces with better investor protection or fiscal conditions. [ABSTRACT FROM AUTHOR]

Financial constraint is a major obstacle for firm growth in emerging economies. Using a World Business Environment Survey (WEBS) dataset, we find that formal financing constraint hampers firm growth. Small firms suffer more than large ones from financial constraint, whereas there is no significant difference between state-owned enterprises (SOEs) and non-SOEs. Our results are robust when we use collateral constraint as an instrumental variable for formal financial constraint. We provide supporting evidence for the promulgation of financial liberalization, which can help alleviate financial constraint, enhance firm growth, and therefore improve economic resilience and prevent financial risks in an emerging economy such as China. [ABSTRACT FROM AUTHOR]

Using an extended overlapping generations (OLG) model, we theoretically prove that functional inequality resulting from weak labor bargaining power can be a key driver of high saving rates, as observed in China and other labor-abundant Asian emerging markets. Income distribution that favors capital over labor may attract excess capital investments and hence lead to high saving rates. The link between inequality and saving is especially prominent for the household sector because excess return on capital motivates the working-age population to increase their retirement savings. We also find empirical support for our theoretical predictions using China's sectoral-level data. [ABSTRACT FROM AUTHOR]

This study investigates the influence of analyst coverage on corporate leverage adjustment (CLA) in China. We analyzed 26,673 firm-year observations from the Shanghai and Shenzhen stock exchanges from 2000 to 2020 and found that analyst coverage had a negative impact on CLA, which was stronger in firms with poor performance. We posit that analyst forecast divergence and pressure-induced managerial myopia are possible mechanisms through which analyst coverage influences CLA. Our study contributes to the dynamic trade-off model literature by demonstrating that analyst coverage is also a determinant of CLA. Furthermore, our findings help regulators and investors to comprehensively understand the role of analysts in emerging markets. [ABSTRACT FROM AUTHOR]

Whether foreign investors can play a prominent monitoring role as shareholders in emerging markets is a controversial issue. This study investigates the effect of foreign ownership on corporate real activities manipulation in China. We find that, even after correcting for the potential endogeneity issues, foreign investors help to decrease corporate real earnings management, and this effect is explained by the disciplinary and monitoring roles of foreign investors. We also find that foreign institutional investors have greater influence on real earnings management than domestic institutional investors do. Further evidence shows that foreign ownership affects firm value via real earnings management. [ABSTRACT FROM AUTHOR]

We examine whether firms in the emerging market whose controlling persons have foreign residency rights are more likely to invest overseas inefficiently. Using a sample from China's private listed companies in 2010–2017, we find a positive association between foreign residency rights and overseas investment. The association is more pronounced in controlling persons without actual overseas experience, and the overseas investment performance is worse. The finding is robust to alternative measures and controlling for endogeneity. Overall, our study contributes to the literature on foreign residency rights in the emerging market by providing empirical evidence that the foreign residency rights of controlling persons in China induce inefficient overseas investment. [ABSTRACT FROM AUTHOR]

Using China's mandatory CSR reporting program as a quasi-experiment, we examine the changes in accounting conservatism in an emerging market setting and find that the implementation of mandatory CSR policy significantly decreased accounting conservatism among firms that are required to release CSR reports. Further analyses reveal that this effect is driven by stakeholders' concern about information asymmetry and that CSR engagement helps improve a firm's information environment and lower the information gap. Moreover, we demonstrate that mandatory CSR reporting benefits more for firms with weaker corporate governance and greater information asymmetry. Our results hold after considering the entropy balance, a modified sample, an alternative sample period, and an alternative measure of accounting conservatism while controlling for the effect of confounding events. Overall, these findings provide evidence regarding the consequences of mandatory CSR reporting to financial reports, especially in emerging markets. [ABSTRACT FROM AUTHOR]

As a central issue in macro-finance studies, the spanning hypothesis has always been the focus of research. Previous studies have focused on whether this hypothesis holds true in developed markets, while paying little attention to that in emerging markets. Because of their unique monetary systems, governments in most emerging markets play a key role in bond returns. This study identifies macroeconomic factors for forecasting excess returns in emerging government bond markets under spanning hypothesis. We find that in previous research, government intervention factors employed in excess returns forecasting have no additional predictive ability, as they are already incorporated in current yields. Using dynamic factor analysis, we find that macroeconomic information, including pure macroeconomic activities and financial factors, has robust incremental predictive power for in-sample and out-of-sample bond excess returns. [ABSTRACT FROM AUTHOR]

This study uses the perspective of corporate strategy to examine the relationship between corporate social responsibility and corporate financial performance in China. Following the theoretical business strategy framework and resource-based theory, we adopt the ordinary least squares method to conduct a multiple regression analysis of the relationship between CSR and CFP under different strategy types. We find that for prospectors, CSR is positively correlated with CFP. However, for defenders, it is negatively correlated. Our results remain robust after a series of robustness tests and controlling endogeneity. Our findings help to explain the inconsistent results obtained in the literature, extend our understanding of CSR and the consequences of corporate strategy, and provide a reference for international investors and emerging markets. [ABSTRACT FROM AUTHOR]

Using 2003–2018 data from China, this study analyzes the effect of absence of controlling shareholders on litigation risk. The results show that companies without controlling owners face higher litigation risk, an association that exists mainly in respondent companies. Upon further analysis, we find that this negative effect is more pronounced when the ownership is highly dispersed, and less pronounced for companies with greater analyst followings. This study enriches litigation risk literature from the perspective of absence of controlling shareholders, and enlightens other related studies that focus on emerging economies. [ABSTRACT FROM AUTHOR]

This study examines whether environmental regulations affect innovation strategy of industrial enterprises. We show that strict environmental regulations negatively impact the innovation strategy of industrial enterprises, which leads the firms to be conservative, suggesting that the Porter hypothesis is not realized at this stage. We further demonstrate that environmental regulations have a long-term negative impact on company innovation strategy. Our findings are robust to when adjusting innovation strategy metrics and estimation method. In addition, strict environmental regulations have a more significant negative impact on heavy pollution enterprise. Overall, our results provide clear policy implications by revealing that achieving a win-win situation between environmental protection and enterprise innovation in emerging markets remains a challenge. [ABSTRACT FROM AUTHOR]

Analysts' forecast quality in emerging markets is remarkably low and few influential factors are known. In this study, we use textual analysis to explore the impact of the state's media – China Central Television (CCTV) – on analysts' forecast quality. We find that analysts' earnings forecasts are biased when CCTV news optimistically puts more emphasis on the economy, thus compromising the accuracy of the forecasts. CCTV's impact is enormous in state-owned brokers and firms and firms facing less marketization. Investors can use CCTV's impact on the analysts to act cautiously. [ABSTRACT FROM AUTHOR]

Due to the spread of coronavirus disease 2019 (COVID-19), business environmental uncertainty, a restricted flow of personnel and materials, and changes in consumer demand have impacted business operations and financial performance. This study investigates the relationship between COVID-19, customer concentration, and sustainable growth based on data from listed companies in China. The results reveal that COVID-19 has had a negative impact on sustainable growth, but customer concentration can mitigate this negative association. By emphasizing the moderating effect of customer concentration on the relationship between COVID-19 and sustainable growth, this study provides new insights for firms who are seeking to mitigate the negative shocks of COVID-19 and promote sustainable development. [ABSTRACT FROM AUTHOR]

This article is conducted to examine risk, return, and portfolio optimization at the industry level in China over the period 2007–2016. On the ground of the classical Markowitz framework for portfolio optimization, the mean-semivariance optimization framework is established for China's stock market at the industry level. Findings from this study indicate that healthcare sector plays a significant role among 10 industries in China on a stand-alone basis. In addition, a significant change of rankings among the sectors in term of risk is found when the mean-semivariance optimization framework is used. We also find that utilizing this new framework helps improve the optimal portfolios in relation to performance, measured by Sortino ratio, and diversification. A simulation technique, generally known as resampling method, is also utilized to check the robustness of the estimates. While the use of this resampling method appears not to improve the performance of optimal portfolios compared with the mean-semivariance framework for China, there is a remarkable advance in diversification of the optimal portfolios. Implications for investors and the governments in Vietnam and other emerging markets have emerged from the study. [ABSTRACT FROM AUTHOR]

Using a hand-collected database, we evaluate 328 illegal insider trading cases in the Chinese financial market from 2007 to 2018. Insiders, on average, make less profits than a single buy-and-hold strategy in the same period. This low performance is exacerbated when target firms are state-owned and with high institutional ownership. A firm's size, 6-month past returns, debt ratio, and firm age have marginal impacts on the illegal returns. Two potential mechanisms derived from the US market are tested but they show divergent roles in our model setting. This study calls for alternative mechanisms in understanding market efficiency in emerging markets. [ABSTRACT FROM AUTHOR]

This study aims to investigate the effect of boardroom diversity on Chinese listed firms' operating performance. Incorporating gender, age, tenure, and professional background of board member's attributes into a composite diversity index, the results show that boardroom diversity positively affects operating performance. However, when taking strategic change into consideration, the results indicate that the firms with larger strategic change tend to have a negative correlation between boardroom diversity and operating performance, whereas the correlation is positive if firms with smaller strategic. This study expects to fill the literature gap by extending the understanding of boardroom-diversity-performance relationship in the emerging context. [ABSTRACT FROM AUTHOR]

Using data on companies that have implemented private placements in China from 2011 to 2016, we examine the discount on private placements, short-term stock returns, and long-term performance after the placements. Our goal is to determine whether the prevailing certification and entrenchment hypotheses can explain managerial placements. We find that the participation of managerial investors has a significant and negative impact on short-term stock returns. Such a negative effect can also be found on issuing companies' long-term profitability. Moreover, managerial placements have a higher discount than nonmanagerial placements. Our findings suggest that managerial placement is consistent with the entrenchment hypothesis but not the certification hypothesis. [ABSTRACT FROM AUTHOR]

Institutional investors, especially public funds, play an important role in governing listed firms as they grow in Chinese stock markets. We classify each fund as “dedicated,” “transient,” or “mixed,” according to the concentration, turnover, and profit sensitivity of their stock holdings. We find that listed firms with more shares held by dedicated funds have a higher disclosure quality, while firms with more shares held by transient funds have a lower disclosure quality. These findings are consistent in different model settings. In addition, dedicated funds improve the disclosure quality of non-state-owned enterprises more than state-owned enterprises. Dedicated funds can benefit from the lower debt-financing cost and higher stock liquidity of firms with better disclosure quality. [ABSTRACT FROM AUTHOR]

In this article, we investigate the relationship between financial intermediation and economic growth in China by employing system Generalized Method of Moments (GMM) estimators for dynamic panel data from twenty-eight Chinese provinces over the period 1978–2008. Our empirical results show that various measures of financial development are generally associated with economic growth. More specifically, the size and depth of the financial sector significantly influence economic growth. However, household saving is found to have a negative, but insignificant, effect on economic growth. Finally, we find that although several control variables show the expected signs, they are not always statistically significant. Human capital, openness to trade, and inflation positively influence economic growth. [ABSTRACT FROM PUBLISHER]

An introduction to the journal is presented in which the guest editors discuss financial reforms and performance of emerging market of China's economy.