This study investigates the role of CEOs’ corporate distress experience in shaping corporate cash holdings during periods of macroeconomic uncertainty. Analyzing a sample of 29,882 firm-year observations of exogenous CEO turnovers from 1992 through 2021, we find that firms led by CEOs with prior corporate distress experience hold more cash when macroeconomic uncertainty increases. This effect is more pronounced for CEOs with recent corporate distress experience, suggesting that the timing of prior distress plays an important role in shaping precautionary cash-holding behavior. Additional analysis shows that the effect varies across different types of distress experience, with prior exposure to adverse stock-return shocks, bankruptcy, and bond-rating shocks associated with stronger cash-holding responses to macroeconomic uncertainty. Our findings remain robust across additional analyses that address observable differences between treatment and control firms and alternative variable specifications.
Using monthly U.S. data from 1985–2024, with SPY evidence through Aug. 2025, we show that high tax policy uncertainty (TPU) predicts positive equity returns in the post-2010 period. The estimated high-minus-low TPU premium is approximately 1.7–2.0 percentage points per month in the baseline market regressions and approximately 1.1–1.2 percentage points after controlling for VIX and Fama–French factors. By contrast, high-TPU months have little predictive content before 2008 and predict sharply negative returns during the 2008–2009 financial crisis. The post-crisis premium appears in SPY returns and is concentrated in high tax-elasticity industries rather than high effective-tax-rate industries, consistent with market pricing being associated with anticipated cash-flow reallocations under prospective tax reforms. We interpret the estimates as predictive conditional associations rather than causal effects or evidence of an implementable trading strategy.
This study investigates the dynamic relationship between rare earth elements (REEs) and clean energy stocks, focusing on their association with geopolitical and economic stress, and the escalating demand for clean energy solutions from January 2015 to May 2024. We assess whether REEs are a hedge and/or safe haven asset for the clean energy market and analyze their time-varying hedging effectiveness and hedge ratios. Our analysis suggests a strong non-linear correlation between the markets examined. REEs exhibit a strong positive correlation with clean energy stocks under normal conditions, but this relationship weakens during extreme market volatility. However, REEs show a significant positive correlation with the wind subsector during certain extreme market shocks. This suggests that REEs do not function as a hedge for the clean energy market and do not demonstrate safe haven behavior, especially for the wind subsector during turbulent times. REEs exhibit weak hedging effectiveness, particularly during the United States-China trade tensions, but perform better during the COVID-19 pandemic and other crises. Comparatively, REEs outperform Bitcoin but underperform gold in hedging effectiveness across all subsamples and the full sample analysis. The hedge ratios for REEs vary across subsamples and peak for gold and Bitcoin during the COVID-19 pandemic and the Russia-Ukraine war. Our empirical evidence underscores the vulnerabilities and investment risks of REEs in the clean energy transition. This study provides novel insight for investors and policymakers navigating the complexities of the global energy transition.
This paper offers new empirical insights into the identification and implications of firm insolvency from a developing economy perspective. We employ two identification strategies to detect insolvent firms. First, the ‘economic insolvency’ approach utilizes the interest coverage ratio to identify companies unable to service their debt obligations over an extended period. Second, the ‘technical insolvency’ approach identifies firms with sustained negative equity, indicating that liabilities exceed assets for a prolonged duration. Our findings reveal a declining trend in the share of insolvent firms in Kazakhstan over the past decade. Technically insolvent firms constitute approximately 10% of all firms on average, while economically insolvent firms represent around 3%. We find that insolvency is associated with diminished profitability at the firm level, while the wages-to-assets ratio rises, consistent with labor rigidity rather than proportional labor-cost adjustment. Moreover, sector-level insolvency rates exhibit patterns consistent with negative spillovers on firm performance, suggesting that higher concentrations of distressed firms within an industry correlate with deteriorated financial outcomes across the sector. In addition, we find that a higher sectoral insolvency ratio is associated with lower profitability among healthy firms. Similarly, the negative and marginally significant coefficient for investment implies that capital accumulation among solvent firms declines as sectoral insolvency rises.
As the global transition toward sustainable development accelerates, government guidance funds (GGFs) have emerged as an important policy instrument for channeling private capital toward ESG-oriented sectors through the integration of policy objectives and market-based investment mechanisms. Drawing on reputation theory and imprinting theory, we examine whether venture capital (VC) firms’ prior participation in GGFs enhances the ESG performance of their portfolio firms and explore the underlying mechanisms. We find that, relative to VC firms without GGFs participation experience, VC firms with such experience significantly improve portfolio firms’ ESG performance by attracting green investors and patient capital while strengthening internal governance and the quality of green innovation. The heterogeneity analysis further shows that this effect is more pronounced for firms located in regions with more stringent environmental regulation, higher levels of social trust, and greater government support. Additional analysis reveals that the effect is strongest among growth-stage firms but weakens for mature and declining firms because of organizational rigidities and shifting strategic priorities. Moreover, a disaggregated analysis of ESG dimensions indicates that the improvement is driven primarily by enhanced governance and social performance, whereas the short-term effect on environmental performance is relatively limited. Overall, our findings provide important policy implications for governments seeking to leverage market-oriented financial intermediaries to promote sustainable development and offer practical insights for firms pursuing ESG-oriented transformation in emerging economies.
Using China’s New Regulations on Asset Management (NRAM) as a quasi-natural experiment, this study examines how shadow-banking regulation affects the financial reporting decisions of Chinese A-share-listed non-financial and non-real-estate firms from 2015 to 2024. The results show that firms with greater pre-policy financial asset holdings significantly increase the magnitude of accrual-based earnings management following the NRAM. The baseline effect amounts to approximately 7.8% of the sample mean and becomes evident two years after policy implementation. Both income-increasing and income-decreasing discretionary accruals rise, whereas real earnings management through overproduction and reductions in discretionary expenditures declines, indicating a shift from real activities manipulation toward accrual-based accounting adjustments. The increase in accrual-based earnings management is concentrated among firms exposed to long-term financial assets, particularly available-for-sale financial assets. Mechanism tests show that the NRAM reduces affected firms’ financial asset holdings and related investment income and fair-value gains. Although these firms increase real investment, they experience no corresponding improvement in investment efficiency, total factor productivity, or operating profitability; their return on assets subsequently declines, and they become more likely to report earnings just above zero. The effect is stronger among non-state-owned enterprises, financially constrained and financially dependent firms, firms located in less financially developed regions, and firms subject to weaker external monitoring. These findings identify an unintended financial-reporting consequence of regulatory de-financialization: when the loss of financial income is not offset by improvements in core-business profitability, affected firms rely more heavily on accrual-based earnings management.
Prior studies have linked ESG ratings to improved firm performance, yet how disclosure tone shapes this relationship has received limited attention. Drawing on signaling theory, this study examines whether the tone of ESG disclosures conditions the relationship between ESG ratings and firm performance. Using an initial collection of 10,021 ESG reports from Chinese listed firms, which yields 9,321 firm-year observations after sample refinement, we find that a positive tone is associated with a stronger positive relationship between ESG ratings and firm performance, especially in high-information-asymmetry contexts. Institutional investors with long-term investment horizons and non-QFII institutional investors are more responsive to those tonal signals. The findings suggest that textual characteristics in sustainability reporting carry information weight and that tone may shape how investors interpret ESG performance.
This study is based on the panel data of the China Family Panel Studies (CFPS) from 2018 to 2022. Using the fixed effect model and mediation effect analysis, it systematically examines the impact of intergenerational upward educational mobility on an individual's labor market performance. The study finds that upward educational mobility significantly enhances an individual's overall labor market performance, and this effect holds true in three dimensions: income level, social security, and job satisfaction. The mediation mechanism analysis indicates that upward educational mobility functions through two paths: on the one hand, it helps individuals enter positions with higher professional prestige; on the other hand, and more importantly, it grants individuals greater work autonomy, thereby generating a psychological empowerment effect, which is the key mechanism for improving employment satisfaction. The research results show that the returns of educational mobility not only manifest in the economic income aspect, but also include the empowerment effect at the psychological level, reflecting the multi-dimensionality of educational returns. Heterogeneity analysis reveals that the effect of educational mobility increases with each generation, and is more prominent in the younger cohort, reflecting the impact of the deepening labor market. This study provides new evidence from the dual perspectives of educational mobility and employment quality for understanding the educational benefits in the Chinese labor market, emphasizing the important policy significance and value of promoting educational equity for promoting high-quality employment and optimizing human resource allocation. This study has certain limitations, such as a single data source and the lack of micro-individual perception data, future research can be further expanded.
Using panel data for 31 provincial-level regions in mainland China from 2014 to 2023, this study examines the relationship between an increase in non-tax revenue and local education expenditure. The results show that an increase in non-tax revenue is significantly associated with higher local education expenditure. This finding remains broadly robust to System GMM estimation, policy-exposure instrumental variable estimation, and a series of robustness tests. Component-level analysis reveals that Special-Purpose Revenue, Administrative and Institutional Charges, and Revenue from the Compensated Use of State-Owned Resources and Assets are significantly and positively associated with local education expenditure, whereas Fines and Confiscation Revenue and Other Revenue exhibit no statistically significant associations. The estimated coefficients also differ across revenue components. Exploratory panel threshold analysis further identifies significant single-threshold effects when Administrative and Institutional Charges, Fines and Confiscation Revenue, and Other Revenue are used as threshold variables. However, the changes in the coefficients across regimes are modest and do not alter the underlying positive relationship. By incorporating fiscal revenue sources and their internal composition into the analysis of local education expenditure, this study extends the relevant literature, provides new provincial-level evidence on the relationship between different fiscal revenue sources and local education expenditure, and offers policy implications for differentiated non-tax revenue management and local education financing.
Using panel data for 31 provincial-level regions in mainland China from 2014 to 2023, this study examines the relationship between an increase in non-tax revenue and local education expenditure. The results show that an increase in non-tax revenue is significantly associated with higher local education expenditure. This finding remains broadly robust to System GMM estimation, policy-exposure instrumental variable estimation, and a series of robustness tests. Component-level analysis reveals that Special-Purpose Revenue, Administrative and Institutional Charges, and Revenue from the Compensated Use of State-Owned Resources and Assets are significantly and positively associated with local education expenditure, whereas Fines and Confiscation Revenue and Other Revenue exhibit no statistically significant associations. The estimated coefficients also differ across revenue components. Exploratory panel threshold analysis further identifies significant single-threshold effects when Administrative and Institutional Charges, Fines and Confiscation Revenue, and Other Revenue are used as threshold variables. However, the changes in the coefficients across regimes are modest and do not alter the underlying positive relationship. By incorporating fiscal revenue sources and their internal composition into the analysis of local education expenditure, this study extends the relevant literature, provides new provincial-level evidence on the relationship between different fiscal revenue sources and local education expenditure, and offers policy implications for differentiated non-tax revenue management and local education financing.
Public data access is an important measure to promote digital government construction and the digital economy strategy, thereby unleashing value-creation effects, fostering social innovation, and enhancing economic vitality. Using panel data on cities at or above the prefecture level in China from 2007 to 2023, this paper constructs a multi-period difference-in-differences model based on the quasi-natural experiment of public data access to examine the green innovation effect of public data access systematically. The study finds that public data access can significantly improve urban innovation levels, and the green innovation effect brought about by public data access has the effect of "improving quality and increasing quantity". Mechanism analysis shows that public data access promotes improvements in urban innovation by enhancing government governance and fostering talent agglomeration. Meanwhile, the green innovation effect of public data access is more substantial in resource-based cities, the eastern region, non-metropolitan cities, cities with good digital infrastructure and stronger environmental supervision,and megacities. In addition, the green innovation effect brought about by public data access can not only reduce carbon emissions but also enhance the utilization rate of green energy. The research conclusions have important policy implications for further promoting the opening and sharing of public data, driving green, low-carbon economic growth, and realizing high-quality economic development.
This paper examines how Chinese banks allocate assets between loans and securities under different macro-financial and regulatory conditions. Using panel data for 42 listed banks from 2010 to 2023, we classify securities holdings into government bonds, corporate bonds, and securities issued by, or linked to, financial institutions (FIS). We find that higher inflation is associated with larger loan shares and smaller securities shares. In contrast, higher interbank rates are associated with lower loan shares and higher securities shares, particularly FIS. Regulatory indicators are also related to portfolio composition: higher reserve ratios are associated with smaller securities shares, while higher capital ratios are associated with lower FIS shares within securities portfolios. Overall, the findings suggest that the relative allocation between loans and securities and the composition of securities holdings vary systematically with macro-financial conditions and regulatory constraints. The results are consistent with the balance-sheet reallocation mechanisms underlying the bank balance sheet channel of monetary policy, thus highlighting the importance of monitoring banks’ securities composition, particularly exposure to FIS.
Persistent fiscal imbalances in SSA continue to constrain sustainable development and weaken the effectiveness of counter-cyclical fiscal policies. This study examines the effect of financial development on fiscal balance, with particular attention to the moderating role of economic growth. The analysis employs System GMM estimation within a dynamic framework consisting of fiscal revenue, fiscal expenditure, and fiscal balance equations using an unbalanced panel of 30 SSA countries over the period 2005 to 2023. The findings show that while financial development has a positive and significant effect on both fiscal revenue and expenditure, the overall effect on fiscal balance remains insignificant, as the change in fiscal revenue is offset by the change in fiscal expenditure. Similarly, the interaction between financial development and economic growth, as well as institutional quality, remains statistically insignificant. The results further reveal that economic growth, natural resources, the real effective exchange rate, and foreign direct investment growth improve fiscal balance whereas foreign aid and public debt growth significantly worsen it. In contrast, formal fiscal rules, inflation, and the COVID-19 pandemic do not exert a sufficient significant effect on fiscal balance. The findings suggest that SSA countries should strengthen their financial sectors by improving the access, efficiency, and depth of financial institutions and markets, while also enhancing their integration with the broader productive economy. At the same time, implementing debt controls to manage excessive expenditure, ensuring fiscal balance improvement to support long-term growth and development goals.
This study uses data from listed companies and regional indicators spanning 2014–2023 to explore the impact of executives’ financial backgrounds (FRM) on corporate financialization (Fin) and its subsequent effect on the regional share of non-government employment. We estimate firm- and year-fixed-effects models with firm- and regional-level controls, test the mediating pathway, apply an instrumental-variable strategy to address endogeneity, and use propensity-score matching as a robustness check. The findings reveal a significant positive relationship between FRM and Fin, indicating that executives with financial expertise are more likely to engage in financialization strategies that impact corporate financial structure. Furthermore, higher Fin levels are associated with an increased regional share of non-government employment. The analysis demonstrates that FRM influences regional employment indirectly by driving financialization processes within firms. Additionally, the mediating effect of financialization varies across regions with different levels of educational attainment, emphasizing the influence of human capital in shaping financial outcomes.
This study examines the relationship between renewable energy and energy poverty in Africa, highlighting the role of financial development, institutions, and markets. Using panel data for 30 countries from 2000–2023, energy poverty is measured by lack of access to clean cooking fuels and electricity. Lewbel 2SLS and fixed effects threshold models are applied to address endogeneity and capture nonlinear effects. The results indicate that renewable energy consumption is associated with higher energy poverty. However, when financial development exceeds thresholds (0.278–0.341), renewable energy reduces poverty, benefiting clean fuel access and electricity access. In low-income countries, renewable energy increases energy poverty due to affordability and weak financial mechanisms. In lower-middle-income countries experience transitional effects, with impacts sensitive to financial conditions. In upper-middle-income countries, renewable energy significantly lowers energy poverty. The findings highlight that renewable energy policies must be paired with financial sector reforms to achieve inclusive and balanced energy transitions.
This paper examines the causal effect of political disconnection on corporate green innovation in China. We exploit Rule No. 18, which mandated the resignation of politically connected independent directors (PCIDs) from listed company boards, as a quasi-natural experiment. Using a difference-in-differences design applied to green patent data for Chinese listed firms over 2011–2017, we find that mandatory PCID departures increase firms’ green patenting activity. The evidence is consistent with two related channels. Political disconnection is associated with lower relationship-maintenance costs and improved financial-health conditions, which may free resources for green patenting. It also appears to expose firms more fully to local environmental compliance pressure. The effect is stronger among firms with weaker pre-treatment governance, firms in more competitive industries, firms with higher digitalisation, and firms located in less developed factor-market environments. The response is concentrated in innovation quantity: both utility model and invention patent applications rise, while broader patent-quality measures do not improve consistently. The findings show that political connections shape firms’ green patenting behaviour, and that governance reforms targeting political embeddedness can support corporate environmental innovation when they operate alongside credible regulatory pressure.
The paper examines the nexus between intangible assets (IA) and firm value (FV) using a large sample of European listed firms from 2007 to 2021. While prior studies generally document a positive association between IA and FV, they largely overlook how institutional and innovation environments condition this relationship, especially in a cross-country European context. Beyond the average association, the study examines whether this nexus is conditional on institutional and innovation-related environments. Employing both static and dynamic panel models (e.g., SYS-GMM), a negative association between IA and FV was found. This negative association persists for major subclasses of IA, namely goodwill and other identifiable intangibles. This finding challenges the dominant view in the literature that intangible investments are uniformly value-enhancing. Importantly, the magnitude of the IA–FV association varies systematically across country groups, revealing substantial institutional heterogeneity. While the negative association is present across all subsamples, it differs between Old and New EU Member States, as well as between Northern and Southern European countries, highlighting the roles of institutional maturity and market discipline. Moreover, we show that access to innovation resources moderates the IA–FV nexus, indicating that firm-level intangible investments and country-level innovation systems act as complements rather than substitutes. By incorporating a composite measure of innovation resources, the study uncovers a previously underexplored channel linking national innovation capacity to firm-level valuation. Overall, the findings suggest that the value relevance of IA is context-dependent, with important implications for managers, investors, and policymakers. From a policy perspective, the results suggest that strengthening national innovation systems (e.g., improving university–industry collaboration and R&D investment) can enhance the effectiveness of firms’ intangible investments. For managers, the findings highlight the need to align intangible investment strategies with the surrounding innovation ecosystem, while investors should account for country-level innovation capacity when valuing firms rich in intangible assets.
Firms’ overseas innovation activities are shaped by multiple national policies and are unlikely to respond substantially to a single policy in isolation. Against this background, this study examines whether two place-based innovation policies in China (the National Innovation Demonstration Zones and the Comprehensive Innovation Reform Pilot Zones) promote overseas technology investment by A-share listed high-tech firms. Using panel data for 2009–2023, we apply a Double Machine Learning approach to estimate the effect of the dual-policy framework. The results show that the dual pilot policy significantly increases firms’ overseas technology investment, and that its effect is stronger than that of either policy implemented alone, suggesting a significant synergistic relationship between innovation policies. We further investigate the moderating role of supervisory technology procurement and find an inverted-U-shaped effect on the relationship between the dual pilot policy and overseas technology investment. Heterogeneity analysis shows that the policy effect is concentrated among non-state-owned firms, firms with weaker innovation capability, and firms located in eastern China. This study contributes to institutional complementarity and collaborative governance research and provides practical implications for optimizing policy bundles and calibrating digital supervision.
Corporate donations are frequently perceived as strategic instruments for accruing political advantages. However, when the institutional environment that enables such reciprocal exchanges changes, how should firms adjust their donation strategies? While prior research robustly links political connections to higher corporate giving, causal evidence on how firms adjust their donations when the institutional basis for this exchange is removed remains scarce. Using 13,532 firm-year observations from Chinese A-share listed firms over 2015–2022, we exploit China's transfer of social insurance collection authority from local governments to the national tax bureau as a quasi-natural experiment. We find that the reform reduces corporate donations by approximately 23.6%, operating through two channels: weakened political connections (motivation) and tightened financing constraints (ability), with effects concentrated in strongly regulated industries, highly competitive markets, and among highly leveraged firms. Further analysis suggests the contraction is concentrated in strategic rather than altruistic giving: relief-oriented donations show no significant decline, indicating the reform curbed rent-seeking without impairing genuine philanthropy. These findings offer causal evidence on the institutional foundations of corporate giving and policy insights for comparable developing economies.
Financial crises are often preceded by balance sheet vulnerabilities that are not revealed by traditional early-warning systems and macroeconomic indicators, causing significant socio-economic costs. This study develops early-warning models for currency, banking and sovereign debt crises that incorporates foreign-currency debt and asset–liability currency mismatches as indicators of balance sheet vulnerability. Using cross-country data, I compare the effectiveness of machine learning methods with traditional logistic regression. The results show that ensemble methods provide higher out-of-sample accuracy and precision in both cross-validation and recursive forecasting exercises. To improve interpretability, I use Shapley value decompositions to estimate the marginal contribution of each predictor, thereby demonstrating a nonlinear relationship between external vulnerabilities and crisis risk. Foreign-currency debt and currency mismatches emerge as salient early-warning indicators, providing crisis signals earlier than standard macro-financial variables. Case studies further support these findings by showing the role of balance sheet vulnerabilities in the Asian Financial Crisis, the Global Financial Crisis, and recent crises in Turkey and Argentina. The framework identifies key thresholds in foreign-currency debt and currency mismatch indicators above which crisis probability rises sharply, offering policymakers tractable benchmarks for macroprudential intervention. The findings suggest that policymakers should focus on minimizing vulnerabilities by establishing local-currency bond markets and enhancing macroprudential regulations to reduce crisis risk.
