Approximately 37% of Chinese listed firms possess medical expertise, as indicated by the presence of board members and senior executives with a medical degree or experience in the medical industry. Using the COVID-19 outbreak in China as a natural experiment, we find that the stock returns of firms with medical expertise, excluding those within the healthcare and pharmaceutical industries, are significantly higher than those of firms without such expertise. The positive impact is more pronounced when the CEO or Chairman has medical expertise and when the firm is not state-owned. Overall, this study underscores the importance of diversified executive human capital on firm performance by disentangling the effects of macroeconomic shocks.

This paper examines the pricing behavior of ChiNext's IPO firms during the transition period from the traditional approval-based system to the registration-based system. We find that the IPO underpricing of firms listed during the transition period is significantly higher than those listed before. Among the firms listed during the transition period, those exhibiting higher degrees of earnings management and lower innovation capabilities are more likely to reduce their offer price in order to stimulate stock sales, thus diminishing IPO pricing efficiency. We also find that the positive effect on IPO underpricing is more pronounced for firms operating in highly competitive markets and those with poor profitability. Moreover, firms listed during the transition period have better short-term market performance but their long-term market performance is worse than those listed before. Overall, this study identifies opportunistic behavior of IPO firms during the transition period of system reform. It enriches the literature on IPO underpricing and registration-based system reform.

Using the implementation of the New Asset Management Regulation as a quasi-natural experiment, we examine the effect of strict financial regulation on corporate innovation. We find that the regulation significantly promotes corporate innovation, as evidenced by an increase in R&D investment. Mechanism analyses indicate that this effect operates through reduced financial investment and lower debt financing costs. Cross-sectional analyses further suggest that the effect is stronger among companies with higher levels of financial arbitrage, executives with R&D backgrounds, greater financial constraints, and higher product market competition. Overall, this study contributes to the literature on financial regulation and corporate innovation and helps clarify the policy effects of the New Asset Management Regulation. These findings also have important implications for strengthening financial regulation reforms to promote the high-quality development of the real economy.

We select a machine learning model to identify audit opinion shopping and analyze the factors driving the model. To this end, we use six models, namely random forest, gradient boosting decision tree, random undersampling boosting, logistic regression (LR), support vector machine and multilayer perceptron. Among them, LR outperforms the other models. Using game theory, we classify 58 features potentially affecting opinion shopping into audit object, audit subject and audit environment categories. LR is used to obtain each category’s importance score. We find that audit object features play a crucial role in audit opinion shopping. We also validate and interpret important features. Finally, we use a model to predict audit collusion. Our paper extends the scope of machine learning to scientifically identify audit collusion risk and reveals important features of audit opinion shopping, which has implications for global audit practice.

In the cultural context of “the children follow the father's surname,” the incorporation of both parents' surnames into the children's surnames (i.e., the “new compound surnames” phenomenon) reflects the conceptual change that occurred during the modernization of society. Using a sample of Chinese A-share listed firms from 2011 to 2020, this study examines whether firms led by CEOs with new compound surnames are associated with better environmental, social, and governance (ESG) performance. We find that firms led by CEOs with new compound surnames have significantly higher ESG performance scores. This finding holds after an array of robustness checks. We also find that the effect of CEOs with new compound surnames on ESG performance is more pronounced for non-state-owned enterprises, firms led by CEOs with lower personal economic motivation, and firms located in areas with higher marketization. Our study contributes to the research on executive characteristics and informal institutions by exploring the informativeness of CEOs' new compound surnames and has important implications for corporate governance.

This study investigates how abnormally hot temperatures affect firms’ environmental behaviors in China. We find that firms exposed to abnormally hot temperatures participate in more environmental engagement. We also find that this improvement effect is driven mainly by environmental concerns, including public concerns, CEOs, and governments. Our results remain intact after an array of robustness tests. Further analysis shows that the effect of abnormally hot temperatures on corporate environmental engagement is more pronounced in SOEs, heavily polluting firms, and firms located closer to local environmental protection agencies. Based on the political pressure channel, our results indicate that the improvement effect is more prominent in politically connected firms, cities where local officials can wield more influence, local governments have larger financial slack, and local governments disclose their environmental targets. Moreover, the positive impact of environmental engagement on firm value is stronger when firms are exposed to abnormally hot temperatures. Overall, this study sheds light on the potential stimulation of firms’ environmental actions by global warming, which is yet to be fully understood.

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In the information age, major negative events can spread quickly and affect investors' perceptions and decisions. Using data on major violent crime events in China, we investigate the role of corporate social responsibility (CSR) in mitigating negative regional public sentiment. We find that firms with high CSR performance have better stock returns on event days. We also find that investors react more positively to firms engaging in technical CSR activities (those targeting a firm's primary stakeholders) than to those engaging in institutional CSR activities (those serving the public). Moreover, this effect is more pronounced in firms with better internal control and higher information transparency. This study documents the positive role of CSR in securing firm value in the face of negative public sentiment.

About 37% of Chinese listed firms have medical expertise, as measured by the existence of senior executives with a medical degree or medical-industry experience. Using the COVID-19 outbreak in China as a natural experiment, we find that the stock returns of firms with medical expertise, excluding those within the healthcare and pharmaceutical industry, are significantly higher than those without. The positive impact is more pronounced if a CEO or Chairman has medical expertise and if the firm is not state-owned. Overall, this study underlines the importance of diversified executive human capital on firm performance through disentangling macro shocks.

文章聚焦于委托理财这一最主要的影子银行活动,对比分析了上市公司购买理财产品和持有货币资金对产品市场表现的影响.研究发现,上市公司委托理财阻碍了产品市场业绩提升,且与现金持有的竞争效应存在显著差异,但是只有风险较高、期限较长的理财产品存在上述效应;进一步分析发现,对于非国有企业、融资约束较严重的公司、客户集中度较高的公司,其委托理财对产品市场业绩提升的阻碍作用更显著.

PurposeRobots are widely used in industrial manufacturing and service industries around the world. However, most of the previous studies on industrial robots use data at the national or industry level in the context of developed countries. This study examines the impact of imported industrial robots on firm innovation at the firm level in China.Design/methodology/approachDrawing on a large dataset of more than three million records in China, including non-publicly traded small and medium firms, the authors adopt a difference-in-differences method to investigate the impact and channels of industrial robots on firm innovation.FindingsThe authors find that the application of industrial robots increases firm innovation. Two possible channels are identified through which robots promote innovation: alleviation of financial constraints and the improvement of human capital. Further analysis shows that the effect of robots on innovation is more pronounced for firms that are highly dependent on external financing, belong to high-tech industries, import high-end robots, have insufficient supply of skilled labor and private firms (non-SOEs). The authors also find that industrial robots increase the firms' innovation quality and the marginal contribution of innovation to firms' total factor productivity.Originality/valueThis study provides big data evidence of the unintended positive consequences of industrial robots on firm innovation. The results are helpful to clarify the controversy of industrial robots. It also has important implications for government industrial policy making, firm innovation and human resource management.

This study investigates whether and how the central discipline inspection of the securities regulators affects information environment and investor valuation in Chinese capital market. Based on private equity placement (PEP) events, we find that the self-interested media provide more negative coverage of passed PEP firms during the inspection period than those passed outside the inspection period, resulting in poorer stock returns. We also find that the negative effect of the inspection on PEPs’ market reactions is attenuated in media-connected firms and firms with higher advertising expenditures. However, we do not find significant long-term market performance differences between passed PEP firms during the inspection period and those passed outside the inspection period. Additional results show that during the inspection period, the securities regulators tend to approve PEP applicants with better initial announcement returns. Moreover, sophisticated investors pay a higher price for the shares of these passed PEP firms during the inspection period. Collectively, our findings suggest that anti-corruption campaigns have unintended effects that hinder retail investors’ access to objective information.

More than one in five listed firms in China pay cash dividends during the year right before their initial public offerings (IPOs). This paper examines the association between pre-IPO dividend payment and IPO pricing using manually collected Chinese data from 2006 to 2019. We find that firms initiating pre-IPO dividends tend to have lower IPO underpricing than non-initiating firms. We also find that the effect of pre-IPO dividend initiation on IPO underpricing is more pronounced for firms with greater pre-IPO growth and profitability. Additional analyses indicate that initiating firms have better pre- and post-IPO operating performance and post-IPO stock performance. Moreover, initiating firms pay more dividends and attract significantly higher post-IPO investor attention. Collectively, the pre-IPO dividend initiation is not a short-term strategic behaviour of low-quality firms, but aims to send positive signals and improve investors' stock valuation.

Using a unique list of 528 fake state-owned enterprises (SOEs) exposed in China, we examine whether and how investors react to the government’s property rights protection actions. Our results show that real SOEs with more subsidiaries, pyramid layers, and popularity are more likely to be targeted by wrongdoers. We find that when fake SOEs were exposed, it caused a significant increase in the stock prices of listed central SOEs controlled by the State Council. Further analysis shows that the stock price rise is driven by both the cash flow and risk effects. We also find that the value impact of the crackdown is more pronounced for listed central SOEs with less media coverage, located in weaker legal protection regions, and facing more competition. Overall, our findings provide empirical support for the effectiveness of exposure, as a non-litigation channel of property rights protection, in enhancing firm value.

We study the impact of awe culture on corporate tax avoidance. Using regional induced abortion rates to proxy for awe culture, we document that stronger awe culture is associated with a higher degree of corporate tax avoidance, confirming reverence for life is reverence for rules. Additional analysis suggests that awe culture influences corporate tax avoidance via management opportunism and risk-appetite channels. The conclusions remain intact after an array of robustness tests. Further analysis suggests that the awe culture effect on corporate tax avoidance is insignificant when senior executives or directors have overseas backgrounds or the proportion of female board members is high. However, the effect is more pronounced when firms have high financial constraints, poor internal governance, or weak taxation enforcement. Notably, given that awe culture shapes corporate behavior, firms should fully consider the effect of awe culture in their economic practices.

By proxying 'awe culture' (i.e., reverence for life and ethical behaviour) with regional induced abortion rates, we examine the impact of awe culture on corporate social responsibility (CSR) in a sample of Chinese firms. We find that firms located in areas with higher induced abortion rates spend less funds on CSR activities and obtain lower CSR scores. The findings remain intact after an array of robustness tests. Further analysis shows that the effect of awe culture on CSR is more pronounced in areas with weaker law enforcement and where the local government emphasises economic growth targets. However, the effect becomes insignificant when firms are well-represented by top executives with overseas experience, foreign directors, and a high proportion of female board members. The significance of the effect also diminishes for non-state-owned firms, and firms with higher institutional ownership and higher cash holdings. Moreover, the lack of awe culture attenuates the positive impact of CSR on firm value. Overall, we document that awe culture, as an informal institution, shapes CSR behaviours.

This study examines how social connections between media executives and firms affect initial public offering (IPO) pricing using manually collected Chinese data. We find media-connected firms receive more frequent and more positive coverage than their unconnected peers, resulting in reduced IPO underpricing. However, media-connected firms have worse post-IPO market performance. Although media-connected firms have better pre-IPO accounting performance, they conduct more earnings management under the cover provided by their connected media. Additional results show that the negative effect of media connections on IPO underpricing is more pronounced for media that are not controlled by the central government and are based in the same city as the firm. It is also more pronounced for firms with less institutional ownership and non-state-owned enterprises. Our results remain valid after various robustness tests, such as alternative proxies for IPO underpricing, eliminating alternative hypotheses, matching analysis, instrumental variable analysis, as well as placebo tests. Collectively, our findings suggest that media connections compromise IPO pricing efficiency.

The system of central discipline inspections has become a key anti-corruption governance tool in China since 2013. This paper investigates the impact of a central discipline inspection of the China Securities Regulatory Commission (CSRC) on initial public offering (IPO) underpricing. We find that IPO firms listed during the inspection period exhibit greater IPO underpricing than those listed outside the inspection period. The reason is the increased focus of the CSRC on maintaining capital market stability, which makes it more inclined to approve IPO firms with lower issue prices during the inspection period compared with other periods. We also find that IPO firms listed during the inspection period have better short-term market performance but poorer long-term returns than those listed outside the inspection period. Moreover, the effect of the anti-corruption inspection on IPO underpricing is more pronounced for non-state-owned enterprises, firms with low-quality auditors and firms located in regions with high corruption. Overall, our paper enriches the literature on IPO underpricing and the economic consequences of the central discipline inspection system.

The launch of China's STAR market (officially known as the Science and Technology Innovation Board of Shanghai Stock Exchange) caused a significant drop in stock prices in existing stock markets in the Shanghai and Shenzhen stock exchanges. This study examines whether innovative firms showed more resilience to the shock caused by the launch of the STAR market. Using a sample of Chinese A-share listed firms, we find that firms with higher innovation had significantly higher stock returns during the shock period. This suggests that the STAR market launch induced investors to pay more attention to firm innovation and prompted them to reward innovations to a greater extent. This finding remains intact after an array of robustness tests. Moreover, this effect was more pronounced in non-state-owned enterprises and firms with higher product market competition. Additional analyses suggest that investors prefer firms with higher quality of innovation. Overall, this study finds that innovation plays an important role in capital markets; that is, innovation helps firms resist shock from the issuance of new shares.