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The paper investigates how stock market liberalization influences the internationalization of small and medium-sized enterprises (SMEs). Using the launch of China's ShenZhen-HongKong Stock Connect Program as a quasi-experiment, we apply a difference-in-differences design to examine how the relaxation of foreign investment in listed Chinese SMEs stimulates these firms' exports. We find that SMEs qualified for the Stock Connect program are associated with a larger increase in export propensity and export intensity in the post-liberalization period compared to the control group of SMEs excluded from the program. Our results also confirm the financing and risk-sharing channels underlying this relationship. We document that stock market liberalization relaxes financing constraints of qualified SMEs, boosts investments of foreign institutional investors, and consequently increases their export propensity and intensity. In addition, we show that the influence of stock market liberalization on SMEs' exports is larger in firms competing in industries more dependent on external financing, more export-oriented, and more innovative. The relationship is also greater in firms facing larger financing constraints, investing more in R&D, or being privately controlled, as well as those managed by CEOs with foreign experience. Our results are also robust to alternative models and measures. Overall, our paper confirms the facilitating role of stock market liberalization in boosting SMEs' exporting. [ABSTRACT FROM AUTHOR]

This paper investigates the influence of analyst forecasts on firm innovation from behavioral and institutional perspectives. We argue that optimistic analyst revenue forecasts raise firm expectation on feasibility and effectiveness of implementing an innovation strategy, thus prompt firms to invest more in innovation. We also posit that subnational differences in institutional environment in terms of factor market development, intellectual property rights protections, and government corruption all affect firm perception on return on innovation, and consequently moderate firm decision to invest in innovation. These hypotheses are tested using a longitudinal sample of Chinese listed firms between 2003 and 2017. We document that optimistic analyst revenue forecasts increase firm R&D investment intensity. This relationship is stronger when forecast dispersion is small, when firms are in regions with more advanced factor markets, stronger intellectual property protection, and less corrupted government. [ABSTRACT FROM AUTHOR]

We investigate whether Chinese CEOs consume abnormal or 'excess' perks prior to leaving their firms. Agency models predict that CEO incentives and behavior might change in the years leading up to CEO turnover (the 'horizon effect'). We predict that CEOs might consume excess perks at the expense of owners' interests. Using data on Chinese publicly traded firms between 2003 and 2011 we find that abnormal perk consumption is significantly higher in the last two years of CEOs' tenure compared to previous years. We also find that abnormal perk consumption is lower when the board is more independent, when the firm is privately controlled, and when the external auditor is more reputable. We find that perk consumption in CEOs' terminal years vary with the type of CEO transition. Voluntary CEO turnover is associated with excess perks, whereas forced CEO turnovers are not. We find no evidence that abnormal perk consumption is associated with lower level of executive compensation, dispelling the idea that cash compensation and perks are substitutes. Instead, we document that abnormal perk consumption has a significant negative effect on firm performance. Overall, our results indicate that abnormal perk consumption and poor institutional design are correlated with managerial excess in China and there exists a horizon problem for Chinese executives. [ABSTRACT FROM AUTHOR]