Ineffective legal enforcement undermines the enforceability of debt contracts (Diamond, 2004). For a long period, however, inadequate enforcement of China's Securities Law failed to effectively constrain opportunistic behavior in the corporate bond market. Taking the 2020 revision of the Securities Law as an exogenous shock, this study finds that the reform strengthens the governance role of underwriter reputation in the corporate bond market. Mechanism analyses indicate that the revision operates by enhancing legal enforceability in the bond market. Heterogeneity analyses show that the effect is more pronounced among low or unrated bonds and unsecured bonds. With respect to underwriter characteristics, the effect is more pronounced for bonds underwritten by a single (non-joint) lead underwriter and by non-IPO lead underwriter. Overall, the effect is mainly observed in bond subsamples where alternative governance mechanisms are relatively weak. This study deepens the understanding of how the legal environment shapes financial markets and sheds light on the complex interaction between formal and informal institutions.
Using the staggered implementation of China's FinTech regulatory sandbox by the People's Bank of China since late 2019 as an external shock, this pre-registered study seeks to explore whether and through which channels FinTech regulatory innovation improves credit allocation efficiency. Employing a staggered difference-in-differences framework combined with a triple-difference (DDD) specification, this study aims to examine whether the sandbox strengthens the alignment between firm productivity and bank credit access by reducing information acquisition costs and enhancing borrower screening capabilities. We further hypothesize that the improvement in productivity–credit alignment is stronger for private enterprises and for firms in less financially developed regions.
This paper investigates the dynamic connectedness between four decentralized finance (DeFi) tokens (LINK, MKR, SNX, and BAT) and BRICS equity markets from March 15, 2018, to June 30, 2023, covering the pre-COVID period, the COVID-19 pandemic, and the Russia-Ukraine conflict. Using a quantile vector autoregression framework, we analyze spillovers across the return distribution, while a DCC-MGARCH model is employed to examine time-varying hedging dynamics. The results show that total connectedness is moderate under normal market conditions but surges sharply in extreme quantiles, indicating stronger cross-market linkages during periods of financial stress. Among DeFi tokens, LINK, MKR, and BAT consistently act as net risk transmitters, while SNX behaves as a net receiver around the median but becomes a net transmitter in the tails. Among BRICS equity markets, China and India are persistent net receivers across regimes, whereas Brazil, Russia, and South Africa exhibit regime-dependent transmitter-receiver roles. The hedging analysis further shows that optimal hedge ratios and hedging effectiveness increase markedly during crisis periods, particularly for Brazil, Russia, and South Africa. In contrast, hedging benefits are limited and occasionally negative for China. Overall, the findings suggest that DeFi tokens provide conditional diversification and hedging value for emerging-market equity portfolios, especially during periods of heightened uncertainty.
We examine whether corporate bond issuance spreads reflect firms’ disclosed data-driven decision-making practices and whether this association varies with the local digital financial environment. Using Chinese bond data from 2011 to 2022 and a textual proxy for big-data-driven decision-making (BDD), we find that the BDD–spread association becomes more negative as local digital financial inclusion increases. This conditional association is economically meaningful and persists across alternative measures and specifications. The time-sequenced evidence is consistent with an information-based interpretation: higher BDD disclosure is associated with lower absolute accruals in the following year, while lower absolute accruals are associated with narrower issuance spreads in the subsequent year. Subsample point estimates are more negative for asset-light issuers and for firms with lower peer BDD, smaller boards, or non-Big-4 auditors. The results suggest that the pricing relevance of disclosed data practices depends on the environment in which creditors evaluate them.
This study examines how corporate insiders exploit irrational investor sentiment through R&D catering and subsequently engage in opportunistic selling. Using a panel of Chinese A-share listed firms from 2008 to 2024, this study finds that sentiment-driven R&D catering is significantly associated with greater opportunistic insider selling, and the results remain robust to a battery of robustness and endogeneity checks. The effect is more pronounced in high-tech industries, firms with fewer investor site visits, and firms without QFII ownership. Mechanism analyses suggest that R&D catering is associated with stronger stock price overvaluation and higher idiosyncratic risk. The effect is also stronger among firms with lower patent grant rates, consistent with the relation being strongest when observable innovation outputs are less verifiable. In contrast, R&D catering is not significantly associated with insider purchases, suggesting that the documented pattern is concentrated on the sell side. Finally, the economic consequence analysis shows that opportunistic insider selling in sentiment-driven R&D settings is associated with higher stock price crash risk.
