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The existence of structural change features can lead to the failure of traditional econometric methods. This research uses the Bai-Perron test to diagnose the structural change point of the price series in China's pilot carbon market. It uses an impulse response function to analyze the interaction between carbon prices and energy prices, stock price indices, power industry index, and similar asset prices. The results show structural change points in all five carbon markets during the operation period, and the timing of these structural change points relates to an economic situation and compliance period. In addition, the impact mechanisms of the stock price index, similar asset price, and power industry index on the price of China's pilot carbon market change significantly before and after the structural change points, but the impact of energy price does not change except for the Hubei carbon market. [ABSTRACT FROM AUTHOR]

Digital technology has a significant impact on most industries in the 21st century. The publishing industry is also facing digital transformation, and the traditional paper business is considered polluted and wasteful as it generates carbon emissions. To compare the influence of digital paperless business with the traditional one on environmental performance in publishing, this paper adopts a refined weak disposability model initially introduced by Kuosmanen (2005). The main novelty of the paper is to include two types of desirable outputs in production technology: one is linked to generating undesirable outputs while another is not. Two additional economic assumptions can be imposed on environmental production technology, namely, weak disposability and null-jointness, respectively. We apply the refined model to assess the economic and environmental performance of the publishing industry in China. The paper business generates carbon emissions while the digital outputs (paperless business) may not produce pollution. The empirical results indicate that a vast potential improvement is detected for the digital outputs while limited progress is allowed for traditional outputs. Furthermore, we use the entropy method to obtain a comprehensive digital technology indicator and further explore its influence on performance in the publishing industry. [ABSTRACT FROM AUTHOR]

This paper studies the issuing pricing character of green bonds with the evidence from China and further analyzes the reason why green factor affects bond issuing pricing by analyzing credit rating's intermediary effect and exploring the mediating of policy incentives and third-party green certification. Furthermore, heterogeneity analysis is conducted to analyze how green factor impacts on bond issuing pricing at different quantiles and for companies in different industries or with different ownership. The findings include: (1) Green factor generally reduces the issuance interest rate of green bonds, though this effect is not significant at the low quantiles or at the early development stage. (2) Green factor's impact on bond issuing pricing occurs partly by improving bond credit rating, fully by this way for companies in the construction industry, but directly for companies in other industries. (3) For non-state-owned companies, green factor has direct effect on bond issuing pricing, but this effect is not significant for state-owned companies. (4) Third-party green certification and incentive policies enhance the reducing effect of green factor on the issuance interest rate. This study provides a theoretical reference for environment-friendly investors, financiers with green projects and the regulators caring about green finance. [ABSTRACT FROM AUTHOR]

The article discusses the Chinese Economists Society North America Annual Conference held at University of Alabama in Tuscaloosa, Alabama on March 10 to 11, 2017. The keynote speakers including professors Yang Yao, Kevin Huang, and Yiping Huang are mentioned. It presents an introduction in which the editor discusses articles in the issue on topics including economic stimulus, business profitability, and business cycles.

The strand research of regional branching identifies relatedness as a key driver of new specializations in a region. The purpose of the present paper is to extend the regional branching framework by investigating how a regional knowledge base of information and communication technologies (ICTs) and others (non-ICTs) influences the specialization of financial technology (FinTech) in China at the city level. Accordingly, the empirical analysis focuses on the relationship between relatedness and FinTech diversification using panel data spanning the period 2008–2021 covering 247 China's cities. We obtain that the role of ICTs relatedness is positively relevant in explaining the emergence and development of new FinTech domains. However, non-ICT relatedness is a negative factor in the process of FinTech diversification, which we attribute to the fact that FinTech is less reliant on other knowledge base except ICT sectors. Additionally, the effects of ICTs relatedness are higher in peripheral cities compared to core cities in promoting FinTech diversification. [ABSTRACT FROM AUTHOR]

This paper empirically tests the incentive effect of fiscal policy on corporate innovation from 2007 to 2019 in China. With data from A-share-listed companies in the China Stock Market & Accounting Research (CSMAR) and Wind databases and GDP data from the National Bureau of Statistics of China (NBSC), the paper uses the Hodrick – Prescott (HP) filter method and a panel fixed effects model to empirically test the incentive effect of fiscal and tax policies on corporate innovation, compares the incentive differences between tax incentives and fiscal subsidies across different business cycles, and conducts heterogeneity analysis. The study finds that although fiscal subsidies and tax incentives promote enterprise innovation, the innovation incentive effect of fiscal subsidies is greater during an economic downturn than during an upturn. In contrast, tax incentives are stronger during an economic upturn than during a downturn. The results of this research may help to develop economic policies and to guide the precise implementation of tax and fee reductions. [ABSTRACT FROM AUTHOR]

In this paper, we reexamine the literature on money demand in China published both in English and Chinese language. Over the past 30 years, there has been a regular stream of papers assessing the Chinese money demand function. The literature mostly focuses on income elasticity, stability, and, especially important for China, the adequate choice and quality of data. In particular, regarding the stability of money demand, we find a substantial publication bias towards rejecting stability. When controlling for publication bias and focusing on longer time periods, our paper strongly suggests a stable long-run money demand in China. [ABSTRACT FROM AUTHOR]

Does CSR reflect the "self-interest tool" of management or the "value tool" of shareholders? This paper seeks to examine the impact of CSR on corporate cash holdings in China's stock markets. This paper presents evidence that CSR significantly increases corporate cash holdings, and our findings remain consistent after a series of robustness tests. Mechanism analysis shows that CSR mainly affects cash holding by optimizing corporate governance, which is reflected in that CSR improves the efficiency of investment and increases dividend and R&D investment. Furthermore, CSR has a spillover effect and value enhancement effect that can improve cash holdings at the industry level and also enhance corporate market value. [ABSTRACT FROM AUTHOR]

There are information transfer motives and earnings management motives for the disclosure of R&D expense information. These two motives contradict each other, which can cause distortion of corporate R&D expense information and lead to mispricing of R&D information. In this paper, we investigate the market reaction to R&D expense inquiry letters (hereafter, RDILs) and their impact mechanism from the perspective of correcting R&D information mispricing by using Chinese A-share listed companies from 2015 to 2019. We find that RDILs have a significantly negative market reaction, suggesting that they have additional information content. Mechanism analyses indicate that this information content is affected by the inquiry letter characteristics and the R&D characteristics of the inquired firm. The findings of this paper have implications for how developing countries can use capital markets to stimulate corporate innovation, and for the establishment of proactive inquiry mechanisms to address the mispricing of innovation information. Exchanges in other countries should consider their use. [ABSTRACT FROM AUTHOR]

This paper merges three textual models to construct a series of indicators, which can yield more refined proxies for financial media coverage, to measure the impacts of COVID-19 on Chinese financial markets. Results show that the basic indicator Granger causes the volatilities of bond and stock markets and contributes more to the stock market after the outbreak of COVID-19. Next, four specific market-related indicators have significant effects on the corresponding financial market after the outbreak. Finally, the policy-related indicator has a significant effect on four financial markets after the outbreak, and it causes greater volatility in the stock market. This paper can help the government to stabilize the financial market by managing financial media attention. [ABSTRACT FROM AUTHOR]

Taking 269 prefecture-level cities in China from 2004 to 2017 as the sample dataset, this research employs spatial analysis techniques to investigate the roles of local government competition and land finance on haze pollution. The paper concludes that a significant spatial spillover and time lag are associated with haze pollution. Local government competition and land finance positively relate to haze pollution in the local area, but also produce the same effect on neighboring areas. Local government competition positively moderates the contribution of land finance to haze pollution both locally and in neighboring areas. Moreover, the role of local government competition on haze pollution is significantly negative in the east region, while significantly positive in the central-west region. The impact of land finance on haze pollution in the east region is negative but insignificant, while significantly positive in the central-west region. Local government competition positively and negatively moderates the role of land finance in the east region on haze pollution, while in the central-west region the role is significantly positive. This study provides new research ideas and empirical reference evidence for alleviating haze pollution, which is valuable for accelerating the improvement of China's environmental quality. [ABSTRACT FROM AUTHOR]

China's higher education expansion increases firms' human capital input in terms of the number of educated employees, while its quality undergoes questioning. It is unknown what employees with higher education bring to the firm in China. Considering that investment decision is one of the most important drivers of firm value, we examine how employees with higher education affect firms' investment efficiency in this paper. We document that the number of employees with higher education increases by 89% from 2008 to 2021. We further find that more employees with higher education are associated with higher investment efficiency through mitigating over- and underinvestment. This association is stronger for firms with high product market competition, low customer concentration, state-owned enterprises, and high senior manager education. Collectively, the results suggest that the information inputs channel, monitoring channel and up-and-down communications channel are likely underlying mechanisms through which higher educated employees affect firms' investment decisions. Overall, our paper sheds light on the real effect of higher educated employees on firms' investment efficiency. [ABSTRACT FROM AUTHOR]

This paper explores the spillover effect of proactive preventive regulation represented by R&D expense inquiry letters (hereafter, RDILs) and its impact mechanism. Using deterrence theory and Chinese A-share listed firms from 2015–2020, we find that the industry receiving RDILs has a regulation effect on the R&D investment intensity catering motive of the non-receiving firms in the industry. That is, there is an industry spillover effect of RDILs regulation. The results of the regulatory mechanism analysis show that the industry spillover effect of RDILs regulation is more pronounced for non-receiving firms with more severe R&D manipulation intensity or weaker product market competitive positions. Further analysis shows that the inclusion of peer comparison questions in the RDILs increases the industry spillover effect of the inquiry letter regulation. We also find that the industry spillover effects of RDILs regulation result in higher future innovation quality for non-receiving firms. Overall, our study enriches our understanding of the effectiveness of inquiry letter regulation and provides some guidance for regulators' regulatory practice. [ABSTRACT FROM AUTHOR]

Based on the in-depth analysis of the characteristics of anti-dumping investigations against China from the industry and country concentration degree, this paper finds that NES countries were still the main initiators of anti-dumping investigations, and the industrial sector was the concentrated area. On this basis, this paper adopts the comprehensive feasible generalized least squares method and negative binomial regression to empirically examine factors in anti-dumping investigations against China. The results show that market economic status is not the most critical factor in anti-dumping investigations against China, and the domestic economic situation of importers has a stronger impact. [ABSTRACT FROM AUTHOR]

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]

Implicit government guarantee results in financing convenience and distorting corporate investment. The effects on MCB's credit spread and corporate investment are studied in this paper based on China's bond market from 2010 to 2020. The implicit government guarantee lies in MCBs whose financing costs are significantly lower than those of POEs. The inefficiency of corporate investment also exists in MCBs with investment reductions. But this inefficiency has been corrected by China's recent major national strategy, the Belt and Road Initiative. We provide direct evidence from three perspectives, provinces along BRI routes, city-level features of China-Europe Railway Express and bond-level funding purposes. This paper reveals that implicit government guarantee could only reduce the funding cost, while major national strategy is helpful to promote corporate investment. [ABSTRACT FROM AUTHOR]

This paper examined the impact of "Business Tax to Value-added Tax" on enterprises' innovation output, substantive innovation and the related mechanism. We use a natural experiment involving China's business tax changing to value-added tax ("BT to VAT") and a mediating effect mechanism to identify any causality. The results reveal that "BT to VAT" reform has prompted enterprises to increase their innovation output and substantive innovation, and the level of R&D investment plays an intermediary role in the relationship between "BT to VAT" and the entire innovation output and the relationship between "BT to VAT" and the substantive innovation output of enterprises. Further analysis demonstrates that firms with different ownership types, in different industries and with different degrees of marketization respond differently to the "BT to VAT" policy. Our findings are only significant for non-state-owned enterprises, high-tech enterprises and enterprises in high-marketization degree area. This paper provides a theoretical and empirical basis for detailed analyses of the effects of "BT to VAT" policy, particularly the government's subsequent improvement to the tax reform policy, to further stimulate enterprise investments in innovation as well as industrial upgrading. [ABSTRACT FROM AUTHOR]

This paper examines how COVID-19 affects firm research and development (R&D) using the data of Chinese-listed companies from 2018 to 2020. Our results show that COVID-19 significantly inhibits firm R&D input. However, such significant evidence mainly exists on firms classified as private enterprises, with smaller size, or belonging to high-technology industries. Moreover, we find evidence that the epidemic reduces firm revenue but, in the meantime, increases the financing constraint, leading to less R&D investment. The conclusion of this study provides a theoretical basis and practical reference for enterprises to make better decisions on innovative activities. [ABSTRACT FROM AUTHOR]

The participation of private organizations in the construction of affordable housing is important to ensure a sustainable housing development. This paper uses structural equation modeling (SEM) to investigate the main determinants of private organizations' participation in affordable housing in Hangzhou, China. Our results show that both internal factors (such as value identity, sense of responsibility, profit-seeking tendency, herd mentality, size of organization and knowledge, and experience) and external factors (such as legal system, project profit, policy incentive, financial support, and supporting facilities) significantly impact the participation of private organizations in the construction of affordable housing. Policy implications of these findings are discussed. [ABSTRACT FROM AUTHOR]

The implementation of innovation-driven and regional collaborative development strategies of China has injected new vitality into corporate trans-regional operation and collaborative innovation. Accordingly, listed companies expand the distance between parent and subsidiary in space geographically. This paper discusses the effect of geographic distance between parent and subsidiary companies on corporate innovation. The results show that parent – subsidiary company geographic distance has a significant positive effect on corporate innovation performance. The results still hold following a battery of endogeneity test and robustness check. We also find that government subsidies, information acquisition, and construction of internal capital markets are the mechanisms for the effect to work. In addition, the stimulative effect of parent – subsidiary geographic distance on corporate innovation performance is more pronounced for SOEs, under better intellectual property protection, and for eastern and central China. This paper not only refines the research on corporate innovation at the spatial level for parent and subsidiary companies, but also provides a framework for corporations to implement regional collaborative development and to adhere to a belief in innovation. It can also assist the government in creating a unified national market. [ABSTRACT FROM AUTHOR]

The influence of controlling shareholder characteristics on corporate risk has been a popular topic for discussion in academic and theoretical circles. However, current research lacks systematic and quantitative conclusions based on predictive ability, as it only focuses on the causal relationship between a single characteristic of the controlling shareholder and corporate risk. This paper utilizes the back propagation neural network based on gray wolf algorithm (GWO-BP) method in the machine learning algorithm for the first time and takes the listed companies that publicly issue bonds in the Chinese bond market as a research sample. It summarizes the qualities of controlling shareholders from the perspective of controlling shareholders' risk-taking and benefits expropriation and examines multi-dimensional controlling shareholder characteristics for predicting the debt default risk of companies. This research established that: (1) Overall, the characteristics of controlling shareholders can improve the ability to predict the debt default of a company; (2) The features of the investment portfolio of the controlling shareholder have a higher degree of predicting the debt default risk of a company,while the properties of equity structure and related transactions have a lower degree of predicting the risk of corporate debt default.This research not only uses machine learning methods to study controlling shareholders in China from a more comprehensive perspective but also provides a useful incentive for bondholders to protect their interests. [ABSTRACT FROM AUTHOR]

This paper empirically studies the relationship between the cost of equity capital and annual report tone of listed firms' annual reports from 2007 to 2019 in China. It is discovered that the greater the firm's cost of equity capital, the more positive the tone of the manipulated annual report. In addition, in firms with lower quality of accounting information and higher degree of industry competition, the impact of cost of equity capital on the degree of tone manipulation is more significant, indicating that the impact of cost of equity capital on the positive tone disclosure of annual report is a deliberate manipulation behavior. The heterogeneity analysis shows that the cost of equity capital has a more significant impact on the tone manipulation of corporate annual reports in non-state-owned corporates than in state-owned corporates. Further analysis shows that the increase of the cost of equity capital will lead to the decline of investor's confidence and corporate value and is also the mechanism of the cost of equity capital affecting the annual report note manipulation. Further analysis shows that the increase of the cost of equity capital will lead to the decline of investor's confidence and corporate value, which is also the mechanism of the cost of equity capital affecting the annual report note manipulation. [ABSTRACT FROM AUTHOR]

In this paper, we take the "university enrollment expansion" policy implemented by the Chinese government in 1999 as a quasi-natural experiment and use the difference-in-differences method to identify the effect of human capital expansion on firm innovation. Findings suggest that human capital expansion significantly improves firm innovation performance. More innovation is realized by promoting firms' invention patent applications than their design and utility model patent applications. Further analysis highlights the varying impact of human capital expansion on the innovation performance of firms of different types, thus indicating significant heterogeneity. This study enriches the innovation literature on the drivers of firm innovation by identifying the role of human capital while providing new empirical evidence from the perspective of firm innovation to further understand the microeconomic effects of human capital. [ABSTRACT FROM AUTHOR]

Using the China's stock open-end mutual fund data from 2005 to 2020, this paper finds that bank-affiliated funds outperform unaffiliated funds with similar risk shifting levels. We find that risk shifting of bank-affiliated fund managers is more sensitive to previous performance ranking. Coherently, we collect compensation policy data from 62 fund companies, it is shown that the risk shifting behavior is preliminarily related to the motivational compensation policies. Furthermore, our findings also suggest that skilled bank-affiliated managers are prone to aggrandize the portfolio risk shifting levels to pursue future prominent performance. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of China's regulatory restrictions on financing for real estate development enterprises on the default risk across the industry value chain. We estimate the policy's treatment effect using unique data on contracts of financial leasing firms. Our findings indicate a reduction of 6.9% in the default probability of real estate-related leasing contracts, with shorter contract durations and smaller contracts a heightened susceptibility to the policy's impact. These results provide valuable insight into how financial institutions serving the real estate sector can optimize their risk management strategies in response to regulatory policies. Furthermore, our study highlights the importance of a well-defined and quantifiable financing policy in effectively managing risk across the industry value chain in emerging markets. [ABSTRACT FROM AUTHOR]

In this paper, we apply the banking sector volatility connectedness proposed by Diebold and Yilmaz 2014 to measure the dynamic aggregate volatility risk of the bank system. Using this measure, we study how the aggregate volatility risk of the bank system affects the innovation quality of non-financial listed firms in China. This study finds a positive relationship between the banking sector volatility connectedness and corporate innovation quality. Financial constraints and bank supervision are two plausible channels through which banking sector volatility connectedness could affect corporate innovation quality. In addition, the positive effect of banking sector volatility connectedness on firm innovation quality is suppressed for bank-related firms, and during high economic policy uncertainty and post-2015 stock market crash periods. The results are consistent to a battery of robustness test. Our empirical results present a novel finding that an appropriate high aggregate volatility risk of the bank system has a bright side for company innovation. [ABSTRACT FROM AUTHOR]

This paper investigates the role of political connections in Chinese industrial enterprises receiving government fiscal subsidies. Using data on local officials and enterprises in China, we empirically examine how changes in political connections – due to turnover of key local government officials – impact enterprise subsidies. We find that enterprise subsidies decrease significantly in the year when local officials' turnover. However, subsidies change less significantly when the local party secretary is promoted locally or has greater incentives for promotion. The impact of changing political connections is greater for non-state-owned enterprises and large-scale enterprises. Our research helps understand the dynamics between local governments and markets in China. It also has important implications for regulating how subsidies are distributed. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of different types of government policies related to environmental pollution liability insurance (EPLI) and how these policies promote the demand for EPLI of polluting enterprises. Based on the theory of planned behavior (TPB), we establish a research framework to analyze the effects and mechanisms of the three different policies (mandatory, incentive, and monitoring policies). Our empirical results suggest that the mandatory and monitoring policies can effectively promote companies to buy insurance, but the incentive policies have no significant impact on the insurance demand overall. Furthermore, companies with more positive environmental attitudes are not sensitive to mandatory policies. Although the overall effect of incentive policies is not significant, they have a significant positive impact on the EPLI demand of non-state-owned companies. The monitoring policies prompt enterprises to purchase insurance by strengthening information disclosure and compliant production. [ABSTRACT FROM AUTHOR]

This paper examines whether and how the network centrality of institutional investors affects firms' sustainability development. Using data from the Chinese market, we find that central institutional investors in the social network significantly increase firms' overall ESG performance. For the environmental, social, and governance pillars of ESG, we find that environmental performance is more likely to be driven by central institutional investors. We further show that central institutional investors act as active monitors and resource providers, enhancing firms' ESG performance by improving corporate internal control quality, promoting the corporate information environment, alleviating financing constraints, and increasing green innovation capability. Furthermore, the relationship between centrality and ESG performance is considerably more pronounced for firms with political connections or under a high degree of industry competition but more diminished in periods of high economic policy uncertainty. [ABSTRACT FROM AUTHOR]

This paper research the impact of China's aid to Africa on the products export to China of recipient countries by decomposing the export growth into extensive and intensive margins. Studies have proved that China's aid to Africa contributes to the growth of export to China of recipient countries, and the growth of export of products is reflected in the extensive margin. Next, we also use a series of robustness tests to prove the robustness of the researched results in this paper. At the same time, we use the interaction term of China's fiscal expenditure data and the number of China's aid to Africa as an instrumental variable to eliminate the potential endogenous problems. Finally, the results of mechanism test show that China's aid to Africa will promote the growth of product export and the dual marginal growth of product export by improving the infrastructure of recipient countries and enhancing the industrialization level of recipient countries. In addition, China's aid to Africa shows that China's efforts to shoulder its role as a responsible power in building a community of a shared future for humanity and promoting development of all countries. [ABSTRACT FROM AUTHOR]

This paper estimates the exchange rate exposure of Chinese listed firms across industries and tests whether their risk exposure to foreign exchange rates is shaped by macroeconomic news. Using a sample of 2321 Chinese listed firms from 2007 to 2020, we use six alternative models to estimate firms' exposure to foreign exchange risk and their variations following macroeconomic news. We find that the risk exposure to foreign exchange rates significantly responds to macroeconomic news. The response is larger to news about GDP and international trade, and the response is particularly strong during the times of the Global Financial Crisis, the US-China trade war and the outbreak of COVID-19. Across different currencies, firms are more sensitive to the US dollar exchange rate risk. Across different industries, firms in technology-intensive industries are more sensitive to foreign exchange risk. Overall, the findings in this paper shed light upon the risk management of multinational firms in emerging markets. [ABSTRACT FROM AUTHOR]

The expansion of FTA rules from the border to the "depth" within the border can promote the reduction of trade barriers between member countries. Yet, this can also increase the cost of compliance. Hence, this research examines the impact of FTA deepening on China's import and export trade based on the trade data between China and 21FTA partner countries over the period of 2005–2018. This paper introduces the FTA deepening index, constructs a structural gravity model, and empirically applies PPML estimation and instrumental variable methods. The results show that FTA deepening promotes the growth of China's international trade, and the effect on promoting imports is greater than that of export promotion. Additionally, a heterogeneity test between countries and products is carried out. Based on this, our results reveal that FTA deepening has a more significant promoting effect on China's trade imports from developed countries and has a more significant restraining effect on China's exports to developed countries. Furthermore, we demonstrate that the depth of FTA has a less positive impact on China's agricultural trade than on industrial products. [ABSTRACT FROM AUTHOR]

This paper provides a fresh look to investigate the linkage between rising house prices and corporate financialization. We match data of house prices in 237 cities with publicly listed non-financial and non-real estate companies to establish the causal relationship and further examine the underlying mechanism. The empirical study confirms that rising housing prices have a positive impact on corporate financialization, thereby emphasizing the significance of the housing boom for corporate financialization. We find that the deterring effect is stronger for firms with high cash holdings and is primarily driven by manufacturing firms. In addition, this study explores the potential mechanism generated by financing constraints and investment opportunities. The empirical results show that the housing price boom plays a significant role in promoting corporate financialization by releasing financing constraints. [ABSTRACT FROM AUTHOR]

In this paper, we study systemic risk in China using information from the credit default swap (CDS) data of Chinese firms. We find a large time variation in CDS spreads. More importantly, firms' CDS spreads co-move with each other and the first three principal components (PCs) explain 94% of the time-series variation in CDS spreads. We further identify a set of economic risk factors that drive the co-movement of CDS spreads. Large external economic shocks shift a significant proportion of the variance explanation power from the factors related to China's domestic economic condition to foreign trade and money supply. Our results reveal the sources and dynamics of systemic risk in China. [ABSTRACT FROM AUTHOR]

This paper conducts a textual analysis of the reports on the work of local governments to measure local governments' attention to environmental governance and study the impact of these concerns on corporate green innovation. We find evidence that local governments' attention to the environment will significantly improve corporate green innovation, and the government can promote the green technology innovation of enterprises by providing support and strengthening supervision. Further research shows that the uniformity between the central and local governments and environmental attention pressure from higher-level government reinforce the influence of local environmental attention on corporate green innovation. [ABSTRACT FROM AUTHOR]

This paper uses simulation results from a dynamic computable model as well as estimates by the United Nations of trends in China's population in 2010–2050 to determine the impact of the aging of the population on changes in commodities and price factors at the macro level. Then, the paper uses a top-down and bottom-up cyclic link to connect macroeconomic variables to a micro-level family simulation model, based on the regional characteristics of the distribution of population aging in the country. The empirical results suggest that, with an aging population, the working population decreases, which induces increases in income inequality. Moreover, older families in western China would suffer from the most severe income inequality, and gaps between groups in different regions are progressively increasing as the population ages. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the tone used in the annual reports of listed companies on the probability of regulatory inquiries from 2014 to 2019. The empirical results verify that the more positive tone of the annual report, the more it can exert a psychological framing effect, which makes the regulator less likely to issue an annual report inquiry letter. Further analysis shows that this impact that the tone of annual reports has on the probability of a regulatory inquiry is significantly weakened when the company has irregularities or has been issued a modified audit opinion by the auditor. Overall, the results provide the basis for the government to regulate the information disclosure of the annual reports. [ABSTRACT FROM AUTHOR]

Since its industrialization, China has been continuously promoting environmental governance, and it is worth studying whether this measure has been effective. In this paper, we use industrial pollution control to represent China's environmental governance. Further, we use growth drag caused by energy consumption to describe a win-win situation for energy conservation and economic development. This paper theoretically analyzes the impact of environmental governance on growth drag by incorporating the former into the growth drag model. Thereafter, using data from 283 cities for the period between 2003 and 2017, this paper applies the dynamic panel data model to investigate whether China's industrial pollution control can achieve a win-win situation and its transmission mechanism. The results show that industrial pollution control can alleviate growth drag, implying that China's environmental governance can achieve a win-win situation. However, the effect is more significant in Eastern China and areas with high industrial pollution control intensity. The transmission mechanism analysis shows that industrial pollution control achieves a win-win situation by improving technological innovation, promoting human capital accumulation, and optimizing manufacturing development, of which improving technological innovation is the most significant. [ABSTRACT FROM AUTHOR]

Based on data from China's A-share listed companies from 2011 to 2018, in this paper, we examine the impact of FinTech on corporate zombification risk. We find that FinTech can reduce corporate zombification risk; for each unit increase in FinTech, the probability of a company becoming a zombie firm decreases by 7.8%. In addition, FinTech can reduce corporate zombification risk by improving the efficiency of bank credit and government subsidies. Furthermore, the breadth of FinTech coverage and the depth of application can reduce corporate zombification risk, but the degree of digitization fails to play a role. Finally, not only can FinTech reduce corporate zombification risk, but it can also inhibit the contagion effect of zombie firms in the industry. [ABSTRACT FROM AUTHOR]

This study studies whether the Social Insurance Law implemented in 2011 affects the stock price crash risk. Using the data of Chinese listed companies from 2006 to 2018, this study uses the difference-in-difference method to show that the Social Insurance Law significantly reduces stock price crash risk, and when the tax department collects social insurance premiums, this inhibitory effect still exists, which depends on its taxation efforts. Mechanism analysis find that Social Insurance Law reduces agency costs and improves the transparency of enterprises, indicating that the behavior of enterprises to hide and hoard bad news is reduced. Finally, these effects are more pronounced for enterprises with poor corporate governance, enterprises in regions with poor marketization, and enterprises with lower media attention. Overall, this study provides new insights into reducing systemic financial risks and improving financial market stability. [ABSTRACT FROM AUTHOR]

Based on the non-parametric DEA-Malmquist method, this paper estimates the total factor productivities of the 33 industrial sectors in China for 2002–2014. The proposed industrial restructuring measurement is based on total factor productivity rates. This paper utilizes panel data from Chinese industrial sectors and observes the effects of labor costs and industrial restructuring on economic growth approaches. The results show a clear effect of labor cost increases and industrial restructuring in promoting the transformation of economic growth modes. To transform the mode of China's industrial economic development, improving labor quality, accumulating human capital, and industrial restructuring should be emphasized. [ABSTRACT FROM AUTHOR]

It is becoming increasingly common in recent years that Chinese government officials visit companies on site and the news about this spread widely on the Internet. Official visits can bring various benefits to companies in China, where the government still plays an important role in allocating economic resources, including bank credit. Based on the data of officials' visits to Chinese listed firms during 2006–2019, this paper finds that firms' access to short-term bank loans increases significantly after officials' visits, which, in turn, significantly enhance the degree of maturity mismatch. Furthermore, the paper finds that the stock market reacts negatively to the maturity mismatch. However, firms' stock return is discounted less for maturity mismatch both in short and long term when firms are visited by officials. The findings in this paper are helpful in profoundly understanding China's economic system and Chinese government–enterprise relationship. [ABSTRACT FROM AUTHOR]

Green finance development is a comprehensive system with three aspects interacted: economic, environmental, and financial activities. Based on its internal mechanism, this paper constructs an evaluation system of green finance development, which fills the absence of existing studies on green finance development. The internal development of green finance is transformed into three subsystems by PSR (Pressure-State-Response) model, and the evaluation scores are calculated by the entropy weight method. As the applications of the evaluation system, the horizontal comparison and vertical trend of green finance development in different regions of China from 2004 to 2017 are analyzed, and the relationship between green finance and sustainable energy development can also be quantitatively analyzed. The results show that sustainable energy development can be promoted through the development of green finance, using various measures in dimensions of economic development, financial development, and environmental development. [ABSTRACT FROM AUTHOR]

This paper puts forward "attention hypothesis" and "information revelation hypothesis" in terms of the strong market response to the implementation of the updated China Environmental Protection Law (hereinafter referred to as "the new EPL") in 2015, which verifies the effectiveness of China's capital market in identifying dynamic changes of company fundamental information by selecting listed heavily polluting enterprises in China as research samples. The "attention hypothesis" interprets the slump in stock due to investors' attention attracted by media coverage about implementation of "the new EPL", while the "information revelation hypothesis" focuses on the investors' information acquisition during the hiatus from promulgation to implementation of "the new EPL". This paper is of great significance to help understand the behavioral characteristics, decision-making process and influencing mechanism of investors. [ABSTRACT FROM AUTHOR]

Green technology innovation is an effective way to overcome the constraints of combining resources and environment. This paper focuses on the impacts of media attention and corporate environmental information disclosure on green technology innovation of China's 487 listed heavily polluting companies from 2007 to 2019. The corporate environmental information disclosure was measured using text analytics and data mining and considering the impacts of political connections. The results indicate that: (1) both positive and negative media attention and the quality of environmental information disclosure significantly contribute to corporate green technology innovation, with negative media attention having a more substantial impact than positive media attention; (2) The environmental information disclosure of China's heavily polluting industries acts as a mediator in the impact of negative media attention on enterprise green technology innovation; (3) Political connection as a moderating factor has a major suppressive impact on the mediating model. This paper enriches the research relevant to the drivers of green technology innovation in enterprises. It also provides new ideas for exploring the research on the influence on green technology innovation behavior from the perspective of political connections. [ABSTRACT FROM AUTHOR]

Prior research documents that the network of independent directors brings abundant resources and information advantages. Does it raise the possibility of executives engaging in rent-seeking? This paper investigates the specific impact of the independent director network on executive perquisite consumption in China. The results show that the more substantial the network of independent directors is, the greater the degree of executive perquisite consumption. Different ownership types result in different mechanisms; director network centrality primarily increases the entertainment component of executive perquisite consumption in SOEs, implying "cooperation in governance" and exhibiting inverted U-shaped nonlinear features; director network centrality increases the supplementary component of monetary compensation for executive perquisite consumption in nSOEs, illustrating "coordination in governance." Moreover, the "Eight Rules" and intense external supervision effectively restrain "collusion" of SOEs. [ABSTRACT FROM AUTHOR]

Focusing on rural household self-employment, this paper analyzes the relation between financial literacy and self-employment in China. More importantly, it tests the mediating role of farmers' financial ability regarding asset proliferation and borrowing capacity in this relationship. We draw the following conclusions. First, financial literacy has a significant positive impact on the self-employment of poor rural households. Second, financial ability plays an intermediary role in the relation between financial literacy and self-employment. Third, the borrowing ability of rural households has a strong intermediary effect on the relation between objective financial literacy and self-employment. [ABSTRACT FROM AUTHOR]

This paper studies the relationship between economic policy uncertainty (EPU) and corporate bank credits for Chinese listed companies. We find that high EPU reduce the corporate bank credits. The negative association is less obvious in state-owned companies, that is, SOEs have a higher capacity to resist uncertainty than non-SOEs. Further research indicates that the positive effect of state-owned status on bank credit lines during times of rising EPU is stronger among companies facing more severe financing constraints. [ABSTRACT FROM AUTHOR]

Energy consumption and environmental treatment have always been hot issues. This paper focuses on these two issues in China and attempts to investigate them based on the energy-to-environment (E2E) double-process. To achieve this aim, this paper first develops two E2E double-process models. Moreover, an empirical study is conducted to evaluate the E2E double-process efficiencies based on the data of 30 provinces in China. The results show that: 1)The E2E double-process efficiency in China is stable. However, this efficiency is low with large differences among individual provinces. 2)The values of the E2E double-process efficiency and the E2E energy consumption efficiency of China are similar, and both values are lower than that of the E2E environmental treatment. 3)The E2E environmental treatment efficiency has a potential driving effect in each province of China. 4)The intermediate output is used as a complete or partial input could significantly affect the E2E double-process efficiency. [ABSTRACT FROM AUTHOR]

In this paper, we examine the effect of institutional investors on corporate social responsibility (CSR). We use data on Chinese listed firms from 2010–2018 and find that (1) institutional investors significantly enhance CSR; (2) institutional investors are more inclined to affect CSR engagement through improving firms' information transparency, internal control, and making more site visits; (3) this positive relationship is more profound for state-owned enterprises, politically connected firms, and firms with low financial constraint; and (4) only long-term institutional investors can drive CSR performance. We use three instrumental variables to address endogenous concerns and the results still hold. Overall, our findings indicate that institutional investors can have a social effect. [ABSTRACT FROM AUTHOR]

This paper introduces a weather-related sentiment (mood) index (WSI) for the Chinese stock market based on precipitation and temperature data with the PLS method. We find that the WSI is negatively correlated with the equity market and has strong predictive power that is far greater than that of other market and macroeconomic variables. The predictability also holds under the characteristic-mimicking portfolios. The driving force of the WSI's predictive power appears to stem from its ability to predict future cash flow, which reflects investor preference. [ABSTRACT FROM AUTHOR]

This paper evaluates China's fiscal sustainability by examining national and regional revenue-expenditure nexuses from a time-frequency perspective. Our analysis is novel since research on China in this respect remains limited, and existing literature largely neglects time-frequency dependencies. We employ wavelet techniques to identify the time-frequency relationship between government revenue and expenditure from 1952 to 2020. We find that the national and regional revenue-expenditure nexuses are frequency-dependent and time-varying, providing a possible explanation for the mixed patterns emerging from the analyses based on traditional methods. In addition, the medium- and long-term national and regional revenue-expenditure nexuses in recent years predominantly support the institutional separation hypothesis. These findings indicate that China's fiscal risk is rising and urge for fundamental reforms to safeguard budgetary sustainability. [ABSTRACT FROM AUTHOR]

The importance of green finance has been fully discussed, however, there is surprisingly little direct evidence of the effects of green finance on eco-friendly practices in firms. We explore the effect of green finance on environmental innovation at the firm level using unbalanced data on Chinese A-share listed firms excluding financial firms during 2008–2019. We find compelling evidence of a significant positive effect of green finance on firm environmental innovation. An examination of underlying mechanisms further show that green finance can be effective in by easing the financing constraints, alleviating information asymmetric, and strengthening environmental regulation. Our analyses also show that the effect is particularly pronounced in subsamples of central and western China, non-state-owned enterprises (non-SOEs), and large-sized firms. This paper proves the Porter effect of green finance and provides timely implications for regulators concerned with green development. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the establishment of circuit courts on corporate fraud. Using a quasi-natural experiment in China and the difference-in-differences approach, we find that corporate fraud is significantly lower following the establishment of circuit courts. The reduction in fraud is more pronounced for companies with poor internal and external governance and weak information disclosures. The mechanism analysis shows that circuit courts increase litigation risks faced by companies and deter corporate fraud. Overall, the findings suggest that circuit courts are an effective legal institution to constrain corporate fraud. [ABSTRACT FROM AUTHOR]

There are different types of margin requirements for margin buying and this paper focuses on setting both initial and maintenance margin levels. By using the data of stock portfolio returns over the period from March 31, 2010 to December 31, 2020, the research computes and compares margins derived by several margin setting methods using extreme value theory (EVT) for margin buying in China. Important findings are summarized as follows. First, the VaR-x method generates more accurate forecasts of both unconditional and conditional margin levels than the parametric and the Hill non-parametric methods particularly given lower probabilities of margin violation. This is robust to different portfolios, market conditions and sample periods. Second, margins derived actually vary over time, becoming higher (lower) when market volatility increases (decreases). The findings have important economic and practical implications. [ABSTRACT FROM AUTHOR]

Based on the environmental Kuznets curve theory (EKC) and the double-dividend hypothesis of environmental tax, this paper aims to examine the relationship between environmental tax, economic growth, energy consumption, and carbon dioxide emissions in China, Finland, and Malaysia from 1985 to 2014 using panel autoregressive distribution lag (ARDL) models. This paper discovers an N-shaped relationship between the volume of carbon dioxide emissions and the value of the gross domestic product. Furthermore, this study confirms that the double-dividend effect of environmental tax exists in all three countries in the long run. Overall, this study argues that evidence from Finland and Malaysia on environmental taxes that help the country to save energy and reduce carbon dioxide emissions can provide a reference for China and other developing countries. [ABSTRACT FROM AUTHOR]

Over the past decade, the photovoltaic (PV) industry in China has made great progress. However, this progress benefited from a series of subsidy policies, and with the continuous enlargement of the scale of centralized PV (CPV), the large subsidies have created great pressure on government finance, so achieving grid parity in CPV electricity is an urgent matter. This paper studies the grid parity of CPV electricity. First, this paper calculates the levelized cost of energy (LCOE) of CPV electricity. Second, using historical data and a dual learning curve, the paper predicts the LCOE of CPV electricity under scenarios with different resource zones and utilization times. Third, the paper predicts the LCOE of coal-fired electricity and draws conclusions based on changes in the price of coal and charcoal. Finally, the paper predicts when grid parity in CPV electricity in different resources areas will be achieved. [ABSTRACT FROM AUTHOR]

This paper develops a fixed effect model to evaluate the effect of wind power policy using a panel dataset covering 30 provinces in China during the period 2000–2017 based on the framework of the Renewable Energy Law and its accompanying policies. The empirical results show that three mechanisms, the Total target mechanism, the Feed-in tariffs (FIT) mechanism, and the Special fund mechanism, are significant in improving wind generation and capacity. The Total target mechanism's impact on wind capacity is greater than is that of generation, the effect of both the FIT mechanism and the Special fund mechanism is greater on wind generation than on capacity. The FIT decline mechanism and the Cost sharing mechanism have mutually reinforcing relationships in respect of wind development. The Mandatory connection and purchase mechanism's effect on wind capacity is significant, whereas its effect on wind generation depends on the specific implementation policy. Conclusions and policy recommendations built on these findings are provided at the end of paper. [ABSTRACT FROM AUTHOR]

This paper constructs a dynamic computable general equilibrium model to forecast China's economy, energy use, and carbon emissions. The fossil energy sector and clean electricity sector are disaggregated in detail to obtain robust results. The analysis results show that the industry and energy structure will obviously change along with a high and stable economy growth trend by 2030. Although energy intensity and carbon emission intensity in China will decrease markedly, carbon emissions will keep rising and will not peak by 2030. Therefore, China's government must adopt effective measures to realize the commitment goal. [ABSTRACT FROM AUTHOR]

This paper examines the risk in the online lending market by analyzing the cross-correlation between formal (Shibor) and informal lending markets (including online and offline lending markets) in China using the detrended analysis (MF-DCCA) approach by employing time series data of interest rates covering the period from July 20, 2015, to January 17, 2020. The results reveal cross-correlations between Shibor and offline lending markets and between the online and offline lending markets in both the short and long terms. In addition, the nonlinear Granger causality test showed significant bidirectional causality between Shibor and the offline lending interest rate, and offline lending was the cause of online lending. No obvious causality relationships were noted between Shibor and online lending. The cross-correlation analysis for markets supported further strengthening of regulations of online lending markets. [ABSTRACT FROM AUTHOR]

To protect the interest of the investors, the corporate bond market in China has implemented a trustee system. However, before the first bond default happened in 2014, implicit government guarantee for the issuers ensured a market with zero default. In recent years, the rising amount of corporate bond defaults has ignited concerns about the credit risk and brings China's underdeveloped trustee system to authorities' attention. Based on the textual content of the trustee reports from 2013 to 2018, this paper examines the association between the textual content of trustee reports and the credit spreads. Results show that the extent of risk disclosure in trustee reports is positively correlated with the credit spreads. Furthermore, a higher positivity of the trustee reports is associated with lower credit spreads. These results reveal the monitoring and informational role of the trustees in China. Also, incremental explanatory power of the trustees lends support for improving corporate bond risk management. [ABSTRACT FROM AUTHOR]

This paper examines stock market integration between the five ASEAN countries and both the US and China in turn, over the period from November 2002 to August 2020. The linkages between both aggregate and financial sector stock indices (both weekly and monthly) are analyzed using fractional integration and fractional cointegration methods. Further, recursive cointegration analysis is carried out for the weekly series to study the impact of the 2007–8 global financial crisis and the 2015 China stock market crash on the pattern of stock market co-movement. The main findings are the following. All stock indices exhibit long-range dependence. There is cointegration between the five ASEAN countries and the US but almost none between the former and China, except between Indonesia and China in the case of the financial sector. The 2007–8 global financial crisis and the 2015 Chinese stock market plunge weakened the linkages between the ASEAN five and both China and the US. The implications of these results for market participants and policy makers are discussed. [ABSTRACT FROM AUTHOR]

The upgrade of industrial structure is one type of momentum for improving urban ecological efficiency, and exploring the nexus between them can help implement the concept of green development. Using data from 284 cities in China between 2004 and 2019, this research employs a series of econometric models to examine how improving industrial structure contributes to the growth of urban ecological efficiency. The research results reveal that urban ecological efficiency can be significantly improved by industrial structure upgrade, while ecological efficiency is inhibited by low-quality GDP and financial development models and insignificantly decreased by industrial structure rationalization. In addition, industrial structure upgrading has failed to play a mediating role in promoting eco-efficiency through technological innovation and the reduction of pollutant emission intensity. Moreover, officials' turnover plays a negative moderating influence on the role of industrial upgrading in increasing ecological efficiency, while environmental regulation plays the opposite role. This study further conducts triple heterogeneity tests including city size, resource endowment, and regional heterogeneity, which provide a feasible way for further implementation of relevant policies. [ABSTRACT FROM AUTHOR]

Household entrepreneurship can not only promote the sustainable development of the national economy, but also reduce unemployment. However, the urban-rural dual pattern leads to systematic differences in household entrepreneurship. This heterogeneity complicates the relationship between personality traits and household entrepreneurship. In order to study this complex relationship, this study empirically analyzed the influence of personality traits on entrepreneurial decisions and entrepreneurial returns of urban and rural households. Specifically, this study adopts the well-known "Big Five" personality classification criteria in the literature and constructs Probit, Tobit, and Heckman models based on the data of Chinese Family Panel Studies (CFPS) in 2016 and 2018. The results determine those factors beneficial for entrepreneurship, and the return of entrepreneurship depends upon the optimism, rigorousness, and preciseness of the householder. Additionally, the unrestricted intention of the household's head is not conducive to entrepreneurship. The relevant departments should thoroughly acknowledge the influence of personality traits on the effectiveness of policies while making relevant policies involving household entrepreneurship. [ABSTRACT FROM AUTHOR]

Most emerging economies are in a transition period, and an imperfect institutional environment will lead to inefficient supervision mechanisms in the digital economy. Based on data representing the experiences of China's listed commercial banks from 2013 to 2021, this study empirically examines the impact of the digital economy on credit risk by using a panel fixed-effect model. The findings indicate that the development of the digital economy helps to reduce credit risk faced by commercial banks. Institutional variables, such as financial supervision and the legal institutional environment, have significant mediation effects of the digital economy. By increasing the intensity of financial supervision and improving the legal institutional environment, the digital economy can reduce the credit risk faced by commercial banks. Interestingly, the effect of the digital economy on credit risk is not uniform across all banks. State-owned commercial banks benefit more from the digital economy in terms of reducing their credit risk than on non-state-owned banks. The inhibitory effect of the digital economy on the credit risk of commercial banks is significant in eastern China but not in central and western China. [ABSTRACT FROM AUTHOR]

Effectively improving the green total factor productivity (GTFP) of high-carbon enterprises is the key to adhering to green development and achieving the dual-carbon goal. This study examines the relationship between fintech and enterprises' GTFP based on an SBM-undesirable model with data from eight high-carbon industries in China from 2006 to 2020, and addresses the endogeneity issue with instrumental variables and propensity matching scores. It has been discovered that for every 1% increase in the level of fintech development in a city, there will be a 1.08% increase in the GTFP of local high-carbon enterprises; fintech boosts GTFP by reducing financing constraints and promoting green technological advances to promote the green transformation of high-carbon enterprises across the board; and the role of fintech in boosting GTFP is more pronounced in the midwestern regions, non-resource cities, cities with weaker environmental regulations, and non-state-owned enterprises. Overall, the development of fintech contributes to the environment and economic growth. [ABSTRACT FROM AUTHOR]

This paper proposes theoretically that FDI(Foreign Direct Investment) not only increases the share of high-quality export products in China's manufacturing industry but it also exerts an effect of demonstration and competition on local enterprises, thus facilitating local enterprises to improve the quality of their export products. We empirically test this theory by using the customs database, which confirms that FDI has a positive impact on the quality of Chinese export products. On the one hand, the export products of foreign-funded enterprises, making up more than 50% of the share of China's exports, are of a higher quality than those of China's local enterprises. On the other hand, FDI strengthens the market competition of local enterprises and promotes the TFP (Total Factor Productivity) of Chinese enterprises, thereby positively affecting the quality of their export products. [ABSTRACT FROM AUTHOR]

This paper conducts a time-frequency analysis of the macro-financial variables in China to assess its resilience in fighting the coronavirus pandemic (COVID-19). We find that the Chinese business and financial cycles over the short, medium, and long terms all are in, or close to, the contraction phase before the COVID-19 outbreak. Meanwhile, the Chinese economy has decoupled from the global financial cycle since 2015. These results suggest that China may be better positioned than other emerging economies to win the war against the pandemic. However, extraordinary macroeconomic policies are still needed to mitigate the pandemic-induced economic meltdown. [ABSTRACT FROM AUTHOR]

This paper employs survival analysis to examine the duration of cultural goods exports from China. We use disaggregated product-level data from 1995 to 2020 to explore the export dynamics of Chinese cultural goods and investigate the determinants. We find that most of the export relationships are short-lived, with a median duration of one year. However, if Chinese cultural goods can survive in the foreign market during the early stage, they will face a lower probability of failure and tend to survive for a longer period. In addition, we show that cultural distance is more of an obstacle to the exports of cultural goods under the framework of the gravity model. These findings survive a variety of robustness checks and have important policy implications. [ABSTRACT FROM AUTHOR]

This paper explores how corporate financial portfolio influences distress risk. We define distress risk as a dummy variable determined by whether firms need external subsidies to repay the interest payable. Spanning our analysis with 3,698 listed firms in China between 2007 and 2019, our findings are twofold. First, financial portfolio is associated with less distress risk. Second, the impact is more pronounced for firms with higher levels of liquidity of financial portfolio. We provide evidence that corporate financial portfolio prevents distress risk by reducing financial expenses and by improving investment income. Our findings post a challenge to the existing view in China that financial portfolio would harm corporate operation. The implication is that companies could allocate more liquid financial assets than illiquid ones to mitigate forewarned risk. [ABSTRACT FROM AUTHOR]

This paper examines the effect of digital transformation on pay gap between executives and employees using a large panel of listed companies in China spanning 2013–2020. Baseline results show that digital transformation of enterprises can largely increase the pay gap. Mechanism tests show that the digital transformation of enterprises increases the income of executives and ordinary employees, and the income of executives is increasing faster than ordinary employees. Furthermore, employee's skill level is an important influence mechanism of the effect of digital transformation on within pay gap. Heterogeneity analysis finds that this effect is more pronounced in firms with fierce industry competition, traditional firms, large firms, and firms with lower shareholdings of executives. Lastly, we find that the pay gap induced by digital transformation enhances corporate performance. Overall, this study complements the determinants of compensation structure from a new perspective of digital transformation. [ABSTRACT FROM AUTHOR]

Based on China's supply-side structural economic reforms, this paper examines the impact of the Belt and Road Initiative (BRI) on the formation of zombie firms. We find that the BRI significantly inhibits the formation of zombie firms by easing financial constraints and optimizing investment efficiency. Our findings are robust to different model specifications and samples. Further investigations find that the impact of the BRI is pronounced for private enterprises, manufacturing enterprises and enterprises with more intense market competition. Overall, our results provide clear policy implications by shedding light on the role of the BRI in optimizing the allocation of resources. [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]

This paper utilizes China's interbank deposit system under COVID-19 to examine how interbank network changes with considerable uncertainty surrounding exogenous shock. We investigate the interbank network in China by specifying the core-periphery pattern to disentangle the network development and the pandemic onset. In order to model the interbank deposit system, maximum entropy and partition-based approach are employed to estimate the bilateral exposures for banks and identify the network structure, respectively. We find that the four largest global systemically important banks (G-SIBs) in the world play a critical role in bearing interbank burden under this crucial period by increasing interbank assets and decreasing interbank liability. By comparing the situations before and after the outbreak of the pandemic in stress-testing, the empirical evidence shows that the number of cores and capital of them is declined in 2020Q2; however, the topological structure of the network is increasingly similar to a typical core-periphery pattern, and the changed interbank network can better absorb the loss and interrupt the contagion of systemic risk. [ABSTRACT FROM AUTHOR]

This paper investigates whether and how financial openness affects firm innovation. Based on the data of Chinese listed companies and provincial panel data from 2007 to 2019, we find that there is a positive relationship between financial openness and firm innovation, and this effect is more pronounced in state-owned enterprises (SOEs) or firms with concentrated-ownership. In addition, we identify that financial openness can promote firm innovation through easing financial constraints and improving absorptive capacity. [ABSTRACT FROM AUTHOR]

Value-added tax (VAT) rebate policy plays an important role in China's export growth strategy. In this paper, we extended the existing model by introducing the micro-mechanism of VAT rebates into their original framework. This extended model allows us to investigate the economic effect of VAT rebate policy. Our theoretical model suggests that, in the short term, raising the VAT rebate rate may decrease the price as well as the quantity of exports. To empirically examine our conclusions based on the theoretical model, we employ the provincial-level panel data on China covering the period 2012–2017 to analyze the role of VAT policy on exports from China's mechanical goods industry. To address the issue of potential endogeneity, we adopt a propensity score matching (PSM) technique. Our empirical findings based on the panel data confirm that VAT rebates had a significantly negative effect on China's mechanical goods exports. In particular, on average, a one-percentage-point increase in the VAT rebate rate decreases exports by 2.07%. Our results are robust to alternative bandwidths. Areas for future research are also identified. [ABSTRACT FROM AUTHOR]

China is vigorously promoting energy conservation and emission reduction, however, its heating industry is still characterized by high input, high energy consumption, high pollution, but low output. Addressing this issue is of great significance for green economy. This paper tries to figure out the reasons behind this phenomenon by estimating the optimal resource allocation in the industry. The results reveal that labor input plays the most important role, while capital input plays the least. Blind expansion and blind investment exist in the industry. Technological progress's impact on the heating output growth is limited. The contribution rate of scientific and technological progress is negative except 1985–1991 and 1994 indicating that the contribution rate of scientific and technological progress can become negative, and the negative effect grows with the increase in financial burden. This paper provides reference for the heating reform in China. [ABSTRACT FROM AUTHOR]

This paper analyses cash flow sensitivities of cash of the Chinese listed companies after the global financial crisis using System GMM Estimation based on data of listed companies in 2009–2014. This paper focuses on the firm heterogeneity of Chinese enterprises, such as financial constraints, firm sizes and cash dividends, and examines the mechanism involved in the corporate cash flow sensitivity of cash. In particular, the empirical result found that the sign of cash flows has a great impact on the cash flow sensitivity of cash. That is, a positive cash flow of a company has a negative and significant effect on the cash flow sensitivity of cash, while the effect of a negative cash flow is positive. Moreover, working capital influences the corporate cash-holding level. The more the working capital is, the less the cash-holding level becomes. Furthermore, disposals of fixed assets have positive influences on the cash flow sensitivity of cash. [ABSTRACT FROM AUTHOR]

This study examines how corporate tax integrity affects financial constraints. In the past, scholars have captured corporate's trust in an indirect way, and our paper fills this void. To capture the earned trust of enterprises in a more direct way, we use a firm's tax integrity level as a proxy for its earned trust. Our results show that corporate tax integrity is negatively related to financial constraints. Further, we examine whether social trust in the regions where the corporate is located will affect the relationship between firm's tax integrity and financial constraints, the result suggests that corporate tax integrity has a stronger effect on financing constraints of firms located in high social trust regions. Finally, we further find that firms' business risk is a channel where corporate tax integrity affects financial constraints. [ABSTRACT FROM AUTHOR]

This paper studies the relationship between trust and household wealth. Using cross-sectional data from the China Family Panel Studies, we find a monotonically positive effect of trust on household net wealth while controlling for economic, demographic, geographic, and psychological factors and correcting for endogeneity problems. Furthermore, we find that highly trusting individuals are less likely to be cheated in our sample. These results are in contrast with existing studies that establish a hump-shaped curve between trust and individual net worth. We attribute the difference to culture. Through more thorough analysis, we find that the positive effect of trust on wealth is mediated through participation in financial markets. [ABSTRACT FROM AUTHOR]

We examine the effects of academic independent directors abnormal resignations on a firm's R&D investment. We manually collect the resignations data of 3,964 academic independent directors (IDAs), and find that the abnormal resignations of IDAs reduce firms' R&D investment. The results remain significant after employing a series of endogenous checks and robustness tests. Furthermore, we find that the lack of advising and resourcing channels caused by abnormal resignations are the primary mechanisms for the decline of the R&D investment. Our main finding is more pronounced for non-state-owned enterprises, firms with numerous independent directors, and firms with high profitability and low degrees of financial constraints. We contribute to the literature by proving that the abnormal resignations of IDAs not only decrease firms' R&D investment but also further reduce the innovation quality and firm value over the long run. Overall, this paper supports that IDAs have positive contributions to R&D investment and firms' value. [ABSTRACT FROM AUTHOR]

Using hand-collected data of bank loans and CEO turnovers in China, we investigate whether common ownership compromises creditors' governance role when borrowers underperform. Unlike prior literature on the overall lack of bank monitoring on state-owned enterprises (SOEs) in China, we argue that such governance inefficiency exists only among the lending relationships where the bank and the firm are ultimately owned by the same government agency (i.e., state common ownership). The effects are greater for the firms with a board director from the lending bank, with ownership in the bank's shares, and with political connections. Overall, this paper revisits the functions of state-owned business groups in emerging markets. [ABSTRACT FROM AUTHOR]

The green vehicle routing problem of distributing gasoline to retail gasoline stations in a way that is not just the most cost-effective overall but also reduces its own carbon emissions needs to account for uncertainty from multiple sources. Therefore, in this paper we study how to do this, simultaneously reducing the cost and minimizing the environmental impact in the presence of information uncertainty. Among the sources of uncertainty are random demand by gas stations and uncertain travel time to them by tankers, which we build into our model. We also design a three-stage heuristic algorithm. In the first stage, the chance constraints of the model are converted into their deterministic equivalents. In the second stage, gas stations are clustered, based on their distance and demand for gasoline. In the third stage, we use a genetic algorithm to solve the model based on the first two stages. Finally, we use our simulation results to propose how gas stations can optimize their cost of gasoline distribution. [ABSTRACT FROM AUTHOR]

This research investigates the impact of anti-monopoly law on green innovation by analyzing data on 2539 manufacturing listed firms in China from 2003–2020. The empirical findings first show that implementation of the anti-monopoly law has a significant inhibitory effect on green technology innovation. Second, the inhibitory effect of the anti-monopoly law on green innovation mainly exists in state-owned monopolies and regions with a higher degree of marketization. Finally, the anti-monopoly law affects the green technological innovation of monopolies mainly by reducing monopoly power, strengthening financing constraints, and increasing business risks. The findings herein provide a valuable empirical basis for policymaking bureaus to improve anti-monopoly laws. [ABSTRACT FROM AUTHOR]

The article discusses papers published within the issue, including one on personal taxes on dividend gains, another on the impact of foreign direct investment and short-term capital investment on stock and real estate prices in China and a paper on herding behavior in the Taiwanese stock market.

Using the sample of listed firms in China from 2004 to 2014, this paper investigates the impact of pyramidal ownership structure on firms' audit fees. The results show that (1) generally, the greater the number of pyramidal layers, the more audit fees the firm pays; (2) compared with non-state-owned firms, this relationship is weaker in state-owned firms. Additional tests show that the number of pyramidal layers has a stronger impact on audit fees in firms whose voting rights and cash flow rights are separated. However, CEO duality and management ownership do not affect this relationship. Moreover, in state-owned firms, the positive relationship between the number of pyramidal layers and audit fees only exists in those firms whose ultimate controllers' administrative level is lower. This paper expands the studies on the consequences of pyramidal ownership structure and introduces shareholding structure into the research on determinants of audit fees. [ABSTRACT FROM AUTHOR]

This paper investigates the interaction mechanism of economic and trade shocks between ASEAN (Association of Southeast Asian Nations) and China by building a GVAR model. The results indicate that the effects of China's economic shocks on ASEAN are more distinct than ASEAN's shocks on China. Negative shocks on China's growth rate produce negative effects on ASEAN's economic growth rate. The positive inflation shocks to China's economy produce long-lasting and prominent impacts on ASEAN's inflation rate and raise ASEAN's import and export rate. When China's export growth rate suffers a negative shock, ASEAN countries' economic growth rate declines. When ASEAN countries suffer a negative shock, the effects on China's growth rate, foreign trade, and inflation are quite moderate, but the renminbi depreciates rapidly. [ABSTRACT FROM AUTHOR]

This paper investigates whether executives will bear reputational costs as a result of using tax shelters within different ownership structures. Based on tax-violation events of Chinese listed firms, we find that CEOs in state-owned enterprises are more likely to bear reputational costs than CEOs in non-stateowned enterprises and that the penalty on executives always occurs in the current year rather than in the subsequent year. In addition, the individual reputational cost of tax avoidance is related to tax aggressiveness and regulatory punishment. The more severe the tax aggressiveness or the regulatory punishment is, the greater the reputational cost of tax avoidance is for CEOs in SOEs. Our findings not only provide direct empirical evidence for the research on the corporate reputational costs of tax avoidance in an agency framework, but they also have great significance for understanding "the Under-Sheltering Puzzle.". [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate whether margin downregulations helped enhance the functions of index futures markets following the stock market crash in China in 2015. Using high-frequency trading data, we estimate the changes in the price discovery and volatility spillover relationships between the CSI 300 index and its futures. We find that reducing the margin ratio strengthens the lead role of futures in the lead-lag relationship and results in more volatility transmission from futures markets to the stock market. Furthermore, this paper shows that the expiration-day effect negatively influences the two functions. [ABSTRACT FROM AUTHOR]

This paper investigates interdependence and contagion between oil and BRIC stock markets before and after COVID-19. We used a local Gaussian correlation approach to identify the asymmetric relationship and a bootstrap method to test contagion. The empirical results show that, except for China, the linkages between the crude oil markets and BRIC stock markets significantly increased in crashing markets during the COVID-19 pandemic. Contagion is identified from crude oil markets to the Indian stock market, and from West Texas Intermediate (WTI) futures to the Russian stock market. [ABSTRACT FROM AUTHOR]

Using representative loan-level data in China, this paper shows that bank loans for small businesses are more generous and flexible during the pandemic. In places more severely affected by the pandemic, loans for small businesses have lower costs, shorter maturities, larger amounts, are more likely to be unsecured loans. Small businesses are also more likely to extend the loan repayment, while the probability of defaulting shows no significant differences. Although the easy monetary policies implemented by central banks help small business financing, the government should pay attention to the potential NPL concerns in the post-pandemic periods. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of stock liquidity on firm value in the time of COVID-19 pandemic. Using data from A-share listed companies in China, we calculate the firm value of Cumulative Abnormal Returns through the event study method and stock liquidity by the Amihud illiquidity. We find that significant negative relationships between stock liquidity and firm value exist in the first three days of the COVID-19 outbreak, while significant positive relationships in the following days. We also find that these negative relationships are more significant in severely impacted regions, small companies, and non-state-owned enterprises. [ABSTRACT FROM AUTHOR]

Employing the method of fuzzy Regression Discontinuity Design (Fuzzy-RDD) with 12220 valid sample data from 2,444 enterprises and with data duration covering from February to June 2020, this paper studied the effectiveness of supporting policies for small and medium-sized enterprises (SMEs) during the COVID-19 in China. The study found that the policies which were implemented are beneficial for wholesale enterprises recovery. However, they are not beneficial for manufacturing, transportation and information transmission industries. Suggestions were put forward to the government about how to improve the support policies' effectiveness for SMEs. [ABSTRACT FROM AUTHOR]

This paper aims to build a theoretical framework for the influence of risk awareness of interpersonal trust (RAIT) on entrepreneurship, and explores the influence of RAIT on entrepreneurship with the micro survey data from the Chinese General Social Survey (CGSS) 2010-2013. The study found that, individuals with higher level of RAIT, their probability of starting new business will increase significantly, and with every increase of RAIT level, the probability of business venturing increase almost 4.0%. No mediation effects of information screening and cooperative mechanism are found in the relationship between RAIT and entrepreneurship. Moreover, during the venturing process, risks accompanying interpersonal trust cannot be reduced by social input; the reduction occurs only in eastern China where the economic system and the industrial development standards are more comprehensive and mature. This paper contributes to the literatures in the following two areas: it provides new evidence on how to deal with risks in the entrepreneurship process that accompanying interpersonal trust; meanwhile, it provides an explanatory mechanism on how the risk awareness affects business venturing. [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]

This paper investigates whether mandatory corporate social responsibility (CSR) disclosures impact pay gaps between executives and rank-and-file employees in China. The study shows that CSR disclosure requirements attenuate the pay gap. This impact is more significant among companies with higher information asymmetry, with stronger employee bargaining power, and located in provinces with better legal environments. Finally, we show that a lower pay gap encourages economic growth by improving innovation and productivity. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of CEO duality on bank loan contracting costs. Using hand-collected data of China's loan contracting terms throughout 2004–2020, we find that CEO duality leads to stricter loan contracting terms, shown as higher adjusted loan rates and shorter loan maturity. The results hold after we perform robustness tests including change analyses, propensity score matching analyses, as well as tests based on exogenous CEO turnovers. The positive relationship between duality and loan costs is more pronounced among firms with higher internal and external uncertainties. We further find that information asymmetry and CEO entrenchment are possible channels through which CEO duality increases bank loan contracting costs. Overall, the evidence supports the agency theory view that CEO duality increases firm's credit risk, thus leading to stricter bank loan contracting terms. [ABSTRACT FROM AUTHOR]

This paper examines whether the mandatory implementation of an internal control system influences listed firms' earnings management in China. We use firms that are mandated for implementing internal control as the treatment group, and firms that do not implement internal control as the control group. We find that the mandatory implementation of an internal control system results in an increase in both real and accrual-based earnings management. We also find that the extra institutional compliance cost induced by implementing a mandatory internal control system was the main cause of the increase in earnings management. Our conclusions thus provide empirical evidence that differs from that on the developed market regarding the research about mandatory internal control and earnings management. [ABSTRACT FROM AUTHOR]

This paper examines the impact of pay gap on the quality of the internal control. Using state-owned enterprises listed in China from 2012 to 2019 as samples, we find new evidence of an inverted U-shaped relationship between the pay gap and internal control quality, which includes the executives' internal pay gap, external pay gap, and executives-employees pay gap. Furthermore, we also find that there is an inverted U-shaped relationship between the pay gap and the internal control quality in state-owned enterprises with commercial competition, but we don't find similar results for the samples of state-owned enterprises with specific functions. In addition, we provide evidence that the pay gap not only has a direct impact on internal control quality but also has an indirect impact on internal control quality through agency costs. This study supplements research on internal control quality from the perspective of incentives. [ABSTRACT FROM AUTHOR]

This paper uses the geographic distance between corporate locations and headquarters of credit rating agency as a proxy for corporate private information acknowledged by rating agency, to investigate the effect of corporate private information on its credit ratings. Our samples include the Chinese institutional and corporate bond's credit ratings from 2008 to 2018. Results indicate the geographic distance is negatively associated with the corporate private information accessed by rating agency, leading to a higher information asymmetry, worse institutional and corporate bonds' credit rating and lower quality of the rating information content. Results remain solid and significant after controlling for the implicit guarantee of the government, corporate public information, ownership structure and analysts' skills. We find corporate private information generates more values for corporates whose information environments are more complex, reflected in more business segments and less covered analysts. We also find the open of high-speed railway in China facilitates rating agency's access to corporate private information, thus reducing the impact of geographic distance, while the lockdown periods of Covid-19 pandemic in China suddenly increase the cost of collecting private information and thus aggravating the distance effect. [ABSTRACT FROM AUTHOR]