This paper examines the impact of government debt on the speed of capital structure adjustment by using 28,051 firm-year observations of Chinese listed firms from 2007 to 2021. We find that more local government debt leads to lower firm-level leverage adjustment speed. Transmission tests show that government debt reduces firm-level bank loan financing, raises the cost of debt, and increases agency costs. Heterogeneous results show that for non-state-owned firms, high-growth firms, high-leveraged firms, and firms in which the largest shareholder holds a lower proportion of shares, the negative impact of government debt on the speed of leverage adjustment is greater. In addition, the effect of government debt on leverage adjustment speed is more pronounced for firms in regions where the government debt volume is larger, the fiscal pressure is greater, or the formal institutions are weaker. Finally, greater leverage deviation arising from more government debt weakens firm values.

Most of the research on institutional dual holdings confirms its positive impact on corporate governance, investment efficiency, and firm innovation in developed countries. In contrast, this paper uncovers the flip side of dual holdings in transitional economies. Using China's context, we find that dual holdings increase stock price crash risk, supporting the transient investor hypothesis. Transmission tests indicate that this effect is more significant when investors are transient; dual holdings increase agency costs of controlling shareholders and corporate upward earning management; dual holders exert more selling pressure when the firm experiences negative returns. Heterogeneous tests show that dual holdings' impact is more obvious for firms with higher sales growth, higher managerial agency costs, or those located in lower market-level regions. We also demonstrate how dual-holding information improves practical risk monitoring and capital allocation decisions.

In developed countries and many transitional economies, common ownership between banks and firms (COBF) constitutes a significant channel of bank-firm linkage. Drawing on the Chinese context, this paper investigates how COBF affects corporate leverage adjustment speed. The findings indicate that COBF can accelerate corporate leverage adjustment, and this effect applies to both over-leveraged and under-leveraged firms. Moreover, the impact of COBF on leverage adjustment is more pronounced for firms facing severe financial constraints, high agency costs, and those operating in regions with weaker formal institutions. Specifically, this effect is driven by the reduction of financial constraints and agency issues. Finally, by facilitating faster leverage adjustments, COBF enhances firm performance. Our study contributes to the existing literature on common ownership as well as capital structure theory.

This study investigates the impact of non-punitive regulation on credit ratings using China's context. The results show that when credit rating agencies (CRAs) are subject to non-punitive regulation, they issue higher credit ratings, indicating that non-punitive regulation aggravates conflicts of interest and rating inflation. Furthermore, the impact of non-punitive regulation on credit ratings is more evident when CRAs face higher levels of conflict of interest. Clients of CRAs subject to non-punitive regulation are also less likely to switch to other CRAs for follow-up ratings. Heterogeneity tests reveal that the impact of non-punitive regulation on credit ratings is greater when competition in the rating industry is fiercer or rating agencies are smaller. And the impact is also greater for firms with higher financial risk, tighter financing constraints, or non-state ownership. Finally, non-punitive regulation reduces the information content of credit ratings. The results indicate that non-punitive regulation induces CRAs to cater to clients rather than improve credit rating quality. These findings also have implications for the regulatory practices of other countries.

Based on corporate bond data issued by A-share listed companies in China,this article studies the impact of financial cycles on the design of restrictive covenant clauses in bond contracts.The study found that when the financial cycle is in a boom period,the number of restrictive covenant clauses in bond contracts is significantly reduced;when the financial cycle is in a recession period,the number of restrictive covenant clauses in bond contracts is significantly increased.Channel analysis shows that when the financial cycle is in a boom period,the financing constraints faced by companies are reduced,effectively reducing the use of restrictive clauses in corporate bonds;when the financial cycle is in a recession period,the financing constraints faced by companies are significantly increased,thus increasing the use of restrictive clauses in corporate bonds.Further heterogeneity analysis shows that the impact of financial cycles on the number of restrictive covenant clauses in bond contracts is more pronounced in non-state-owned,low-transparency and low-marketization companies.

This paper investigates the impact of institutional dual holdings on firm leverage adjustment speed in transitional economies, using China's context. We find that, dual holdings increase leverage adjustment speed. And this effect is more pronounced for under-leveraged firms. Transmission tests show that dual holdings reduce corporate risk-shifting behaviour and controlling shareholders' expropriation, while they do not affect managerial agency costs. Heterogeneous tests show that the impact of dual holdings on leverage adjustment is more pronounced for high-growth firms and firms located in low-market-level regions. Finally, dual holdings can improve firm performance through accelerating leverage adjustment speed. This study unveils a novel mechanism through which dual holdings mitigate agency costs and improve corporate financing within transitional institutional contexts, and has implications for corporate finance practice and policymaking in these countries.

The recent development of Fintech has greatly changed the operation and loan management of commercial banks, which has had a significant impact on firm financing and governance. This paper analyzes the impact of the rising use of bank Fintech on leverage adjustment speed. The results show that bank Fintech accelerates firm leverage adjustment speed. This effect is more pronounced for under-leveraged firms, high-growth firms, non-state-owned firms and firms located in regions with more developed institutions. Transmission channel tests show that bank Fintech can accelerate leverage adjustment speed by alleviating firm-level financial constraints and agency problems. Finally, bank Fintech improves firm performance by accelerating leverage adjustment speed. Our work extends the literature on Fintech and dynamic trade-off theory and has implications for banking regulations and Fintech development.

This paper investigates the impact of China's openness policy for the credit rating industry on credit ratings by domestic credit rating agencies (CRAs). Our findings demonstrate that the introduction of foreign CRAs reduces credit rating levels by domestic CRAs. Heterogeneity tests show that this effect is more pronounced when the issuers are small or unlisted, the CRA's market share is lower, or the underwriter's reputation is lower. Finally, openness to foreign CRAs can enhance the information content of credit ratings by domestic CRAs. Our results illustrate that openness to foreign CRAs enhances the reputation concerns of domestic CRAs.

This paper investigates the impact of bank fintech on corporate debt default, and the results show that bank fintech can reduce corporate debt default. Specifically, bank fintech can reduce not only the default of debt issued by banks but also the default of debt issued by other creditors, suggesting a spillover effect of bank fintech in reducing firms' debt default. The heterogeneous results indicate that the mitigating effect of bank fintech on debt default is pronounced for small firms, non-state-owned firms, and firms located in regions with a high degree of marketization. The mechanism tests show that bank fintech can reduce corporate debt default through three channels: increasing new corporate borrowing, improving the efficiency of credit resource allocation, and reducing corporate agency costs.

The paper examines the influence of employment protection on environmental corporate social responsibility (CSR). Our findings demonstrate that employment protection has a negative effect on environmental CSR and green innovation, particularly for financially constrained firms and those with higher agency costs, providing support for the crowding-out hypothesis. Mechanism tests reveal that employment protection reduces operational flexibility and increases the risk of default for firms. Lastly, employment protection promotes the disclosure of CSR information. These findings indicate that CSR may be influenced by agency issues, and increased employment protection leads firms to reduce unnecessary CSR efforts while focusing on cost-effective CSR information disclosure.

Stricter employment protection may affect capital structure adjustment speed in two ways. First, it may increase the cost of capital and decrease the leverage adjustment speed. Second, it increases financing needs and capital adjustment speed. Using China's 2008 Labor Contract Law as a natural experiment and the PSM-DID methodology, we find that the latter effect dominates the former. Specifically, stricter employment protection increases leverage adjustment speed, and this effect is more pronounced for non-state-owned firms and firms with larger leverage deviations. Furthermore, transmission channel tests show that employment protection increases firms’ substitution of labor with capital, driving up investment and financing needs. Finally, the increased leverage adjustment speed induced by enhanced employment protection is beneficial to firm performance.

We investigate the effect of a specific aspect of national culture on the selection of female Chief Executive Officers (CEOs) in Chinese companies. Exploring a sample of 2519 listed firms for the period 2008-2017, we find that firms located in regions that are more demonstrably influenced by Confucianism, which promulgates female subordination to men, are less likely to select female CEOs. In addition, although female CEOs measurably outperform male counterparts, they receive lower pay. We also find that the extent of competition in product markets and the directors' foreign experience moderate the effect of Confucian culture on CEO gender inequality.

Using data on defaulting firms in China, we show that government intervention distorts the discipline imposed by creditors. This paper examines the impact of government intervention on leverage adjustment speed and firm performance of defaulting firms, using non-defaulting firms as the baseline. Defaulting firms have slower leverage adjustment speeds than non-defaulting firms because creditors will constrain these firms by tightening up the loan contracts. In China, local governments have incentives to bail out defaulting firms. Government intervention, by relieving loan constraints and providing subsidies, accelerates leverage adjustment speed for defaulting firms. However, higher government intervention leads to worse performance and overinvestment problems of defaulting firms. This paper indicates that government intervention can rescue and relieve firm financial constraints during an individual debt crisis. However, it can mute the disciplinary role of creditors and distort resources allocation, thus hurting firm performance.

This study investigates the impact of short-term loan rollover restrictions on stock price crash risk using a quasi-natural experiment of China's 2007 regulatory change. Our baseline results show that the rollover restriction reduces stock price crash risk. This effect is more pronounced for firms with higher agency costs or firms with a higher risk of government intervention. Transmission mechanism tests support the idea that rollover restrictions decrease stock price crash risk through information asymmetry and agency cost channels via enhanced monitoring. However, the rollover restriction also leads to a higher liquidity risk, although it does not dominate.

Previous studies show culture has an impact on IPO underpricing. Can Confucianism being a traditional culture system in China affect underpricing of Chinese IPOs? If yes, through what channels? This paper affirms the impact of Confucianism on IPO underpricing using a large sample in China. Results show that Confucianism can reduce IPO underpricing. This effect is more pronounced for non-state-owned firms and firms located in regions with weak investor protection. To investigate which channels of Confucianism affecting underpricing, we find that Confucianism can improve financial reporting quality and stock price informativeness, which is consistent with information asymmetry channel. We also find that Confucianism at underwriter's headquarter can decrease issuing firms' underpricing, consistent with rent seeking channel. We also find that Confucianism can reduce managers' agency costs, which is consistent with agency cost channel. Our results hold after considering alternative proxies for underpricing and proxies for Confucianism, controlling for the influence of formal institutions or other informal institutions, and employing instrumental variables in two-stage least squares regression.

本文实证检验主体信用评级对股价涨跌的影响.结果发现:低的主体评级会提高个股的股价大幅下跌风险;信息不对称程度越高、代理成本越高,低评级影响股价大幅下跌风险的效应越强.从传导机制来看,较低的主体评级水平具有预测企业未来较差绩效的能力,并且伴随着股价信息含量增加,企业未来融资减少,这表明低评级会通过一般性信息渠道、差别信息渠道和融资渠道提高股价大幅下跌风险.评级上调不会影响股价大幅下跌风险,但降低评级则会提高股价大幅下跌风险.

不同于以往从外部因素的角度关注民营企业债务问题,本文从企业自身行为出发分析了民企债务违约是否由内因驱动.具体地,本文考察了短贷长投和多元化经营对民营企业债务违约的影响.结果发现,总体上短贷长投以及多元化程度提高了民企债务违约的可能性.从传导机制上看,短贷长投和多元化降低了企业的盈利水平、提高了过度负债、增加了代理成本,并通过以上三个渠道提高了企业债务违约的可能性.从异质性结果来看,信贷紧缩会加大短贷长投对债务违约的促进作用.对于政府支持的行业而言,短贷长投和多元化引发的债务违约问题更严重.最后,更多的短贷长投和多元化在决策得当情况下不会引发债务违约风险.本文的结果表明,民营企业债务违约主要是由内因驱动,即由企业在"求大""上层次"的心理下实施的粗放式发展模式驱动.本文对于追溯民企违约的根源、精准施策进而更好地支持民企发展具有一定的启示.

In this study, Benford's law is used to examine whether the negotiation ability of executives can strongly influence the compensation level. In this paper, we analyse the executive compensation data of more than 3,000 Chinese listed companies from 1999 to 2017. The results indicated that Benford's law can be used to distinguish performance-based compensations from basic salaries of executives. Some executives prefer to be paid in the form of integers. This study finds that violation of Benford's law in private enterprises indicate that these executives have negotiating power or strong preferences. However, violation of Benford's law in state-owned enterprises is due to restriction orders by the government to control the compensation of top executives. This result reveals the limitation of Benford's law on manipulated numbers.