Using a sample of Chinese firms from 2010 to 2021, we examine whether corporate social responsibility (CSR) influences firms' propensity to engage in related-party transactions (RPTs)-an intriguing yet underexplored relationship. We find robust evidence that CSR-oriented firms are less likely to permit RPTs. Our results further indicate that RPTs conducted by more CSR-oriented firms are viewed favourably by the market and are associated with higher subsequent market value. In contrast, RPTs among other firms correlate with reduced market value, suggesting that CSR-oriented firms only allow efficient RPTs to meet legitimate needs and align with strategic value-maximisation objectives. Additional analysis reveals that ownership structure and firm-level governance quality moderate the CSR-RPTs relationship. These findings remain robust to alternative RPT measures and are not driven by endogeneity concerns.

In the face of escalating climate risks, eco-innovation has emerged as a strategic imperative for firms seeking sustainable development and competitive advantage. While prior research highlights the role of corporate boards in fostering eco-innovation, the specific influence of politically connected directors (PCDs) remains underexplored. Grounded in resource dependence and contingency theory, this study investigates the relationship between PCDs and eco-innovation using a panel dataset of A-share nonfinancial, nonstate-owned firms listed on the Shanghai and Shenzhen stock exchanges from 2007 to 2022. The findings reveal that PCDs significantly enhance firms' eco-innovation outcomes, particularly in environmentally sensitive industries, less developed regions, and firms with high public visibility. By identifying and empirically testing three key contingencies-regional development, industry environmental sensitivity, and firm visibility-this study offers a context-sensitive understanding of when and how board-level political connections contribute to environmental innovation.

In this study, we investigate whether returnee directors (Chinese nationals with foreign experience serving as directors) mitigate opportunistic related party transactions (RPTs), a relatively under-investigated area of research. Using a large dataset of Chinese listed firms, we find that firms with returnee directors are significantly less likely to engage in RPTs (especially abnormal RPTs); this is because returnee directors' international experience and relative independence enable them to serve as effective monitors. This effect is more pronounced in non-state-owned firms and those with weak internal governance. Notably, we find that RPTs in firms with returnee directors are associated with improved firm performance. This suggests that returnee directors, while curbing opportunistic RPTs, may facilitate efficient RPTs that enhance firm value. Furthermore, our analysis reveals that independent returnee directors exert a more significant influence in constraining RPTs compared to executive returnee directors. Our findings remain consistent after a battery of robustness tests.

Based on the premises of the social role theory, we investigate whether board gender composition may influence firm-level pay inequality by improving the ability of boards to oversee managers and counter their influence on the compensation-setting process. Using the data of Chinese listed firms over the period 2007-2022, we investigate the relationship between female board directorships, the CEO-employee pay ratio (pay inequality) and firm performance. Consistent with social role theory, we find that firms with women directors on their boards have higher CEO-employee pay ratios, which have a positive impact on firm performance. We find these results to be robust by using different measures of female board directorships, alternative sample compositions and alternative estimation methods and by addressing any potential endogeneity concerns. Overall, our findings support that women directors are effective in deciding the level of pay inequality that is linked to improved firm performance.

Using a dataset of Chinese listed firms, we examine the relationship between Chinese nationals with foreign experience serving as directors (i.e., returnee directors) and the incidence of corporate fraud. We find a significantly negative relationship between returnee directors and fraud. Further, relative to foreign and independent directors, returnee directors do more than other directors in constraining firms’ fraud. These results are robust to endogeneity concerns addressed through propensity score matching and the Oster (2019) test. Further analyses show that the negative relationship between returnee directors and fraud is more pronounced when the returnees (i) have practical overseas work experience, (ii) work in conservative regions of China where the people are more culturally sensitive, and (iii) are appointed as independent directors. Collectively, the findings imply that technical skillset alone is insufficient for effective monitoring; the ability to work in a culturally sensitive manner and maintain professional independence are equally necessary.

Emerging literature shows that returnee directors have a positive effect on firm outcomes. However, this positive outcome is likely to come at a cost to the firm in the form of increased audit fees. Therefore, in this paper, we examine the relationship between returnee directors and audit fees. We use a large sample of 42,406 firm-year observations of Chinese firms between 2006 and 2022. We find that the presence of returnee directors on corporate boards is related to higher audit fees. The effect is more pronounced in non-state-owned firms than in state-owned firms and when the returnee directors are nonexecutives. The results imply that there is an unintended price to be paid by firms for appointing returnee directors. The results are not sensitive to different firm characteristics and potential endogeneity problems.

This study investigates the impact of politically connected directors on the green innovation propensity of non-state-owned firms. We also examine the moderating effect of CEO characteristics, such as gender, age, and role duality, on the relationship between politically connected directors and green innovation. Analyzing data from A-share non-financial non-state-owned firms listed on the Shanghai and Shenzhen stock exchanges from 2008 to 2021, we find robust evidence that politically connected directors enhance a firm's inclination towards green innovation. Notably, this effect is more pronounced in firms led by female CEOs, younger CEOs, and those without CEO role duality. After addressing potential endogeneity concerns, our results remain consistent. This research has significant implications for various stakeholders, including managers, investors, and policymakers at both national and global levels, offering valuable insights into the role of corporate governance and leadership in driving sustainable innovation.

We investigate whether women directors influence performance-induced CEO turnover. This question is important considering recent calls for the appointment of women directors vis-a`-vis the need to replace nonperforming CEOs. Existing studies report mixed results in different institutional settings. We focus on China, a setting with a dominance of state ownership and absence of board gender recommendations. Using data from Chinese listed firms (2005-2018), we find that while women directors influence the sensitivity of firm performance to CEO turnover, this is only noticeable in non-state-owned firms. We further find that non-executive women directors affect the firm performance-CEO turnover relationship, while executive women directors do not. We also demonstrate that women directors discipline CEOs after poor performance when more than one is on the board and they have business expertise. Overall, our results suggest that women directors are effective (ineffective) in reducing agency problems in non-state-owned firms (state-owned firms).

We examine the relationship between returnee chief executive officers (CEOs) and audit fees in China using robust econometric modeling with 25,630 firm- year observations between 2008 and 2020. A returnee CEO is a Chinese CEO who has previously worked or studied outside mainland China. Consistent with the supply-side argument that returnees improve governance and reduce audit risk, having a returnee CEO is negatively associated with audit fees. This relationship is not sensitive to the source of foreign experience. Firms with (vs. without) returnee CEOs pay lower audit fees. This effect is particularly pronounced for state-owned enterprises. Poorly governed, highly complex and risky firms benefit most from returnee CEOs in terms of lower audit fees. Our findings are robust across various tests. (c) 2024 Sun Yat-sen University. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/ licenses/by-nc-nd/4.0/).

This paper investigates the effects of climate risk on corporate innovation in China. Employing a city-level climate risk indicator that we constructed and a sample of 21,430 firm-year observations of Chinese-listed companies, we find that climate risk is negatively associated with corporate innovation investment and outcome. These results are robust to alternative empirical designs and identifications. Our mechanism analyses reveal that climate risk impedes corporate innovation by motivating firms to increase cash holdings as financial reserves. Additional analyses suggest that the adverse impact of climate risk on corporate innovation is more pronounced for high-tech firms, and less salient for firms with higher financial constraints and female Chairperson or CEO. Furthermore, the decrease in corporate innovation due to climate risk can lead to a reduction in firm value. These findings contribute to the existing literature on climate risk and corporate innovation and inform regulators and listed firms concerning climate risk.

This study reveals that the establishment of intellectual property courts can significantly improve the TFP of enterprises. After a series of robustness tests, the conclusion is still valid. Mechanistic research finds that the establishment of intellectual property courts can promote TFP of enterprises by strengthening regional law enforcement, improving the quality of enterprise innovation, and enhancing the regional business environment. Intellectual property rights protection has heterogeneous effects on different ownership types, enterprise sizes, and product competitive position. Intellectual property protection is highly important for improving the total factor productivity of enterprises and achieving high-quality economic development.

This study examines the relationship between partial privatisation (i.e., state ownership reduction) and green innovation in China. Employing a large dataset of 36,072 firm-year observations between 2005 and 2022, we document a positively significant association between partial privatisation and green innovation, suggesting that privatisation promotes green innovation in Chinese firms. Further analyses shows that the relationship is stronger for firms in environmentally sensitive industries and those located in more developed regions. Our main finding is robust to the alternative measurement of variables and endogeneity concerns using the propensity score matching (PSM), firm-fixed effects and the system generalised method of moments (GMM) approach. Finally, we document that green innovation in privatised firms yields superior performance. Our findings highlight the significant contribution of privatisation in the quest for low-carbon emissions in China by promoting green innovation.

Synopsis The research problem In this study, we examined the effect of an important informal institution, namely, national culture, on audit fees in an international context. Motivation In recent years, extant literature has increasingly focused on country-level differences in the audit environment, as these might have a significant influence on how financial statement audits are conducted across the globe. We contribute to this stream of literature by investigating the impact of national culture on audit fees. The test hypotheses Based on the demand- and supply-side perspectives of audit fees, we hypothesized that national culture dimensions — namely, uncertainty avoidance, power distance, individualism versus collectivism, and masculinity versus femininity — affect audit fees. Target population We used a sample of 27,670 firm-year observations across 22 countries over the 2002–2019 period. Adopted methodology We used ordinary least squares (OLS) regressions as baseline technique and entropy-balanced method (EBM) and system-generalized method of moments (GMM) to address endogeneity concerns. Analyses We examined the impact of Hofstede’s four national culture dimensions — uncertainty avoidance, power distance, individualism versus collectivism, and masculinity versus femininity — on audit fees. We also tested the robustness of results using alternative measures of national culture, subsample analyses, and additional firm-level factors. Findings Consistent with our hypotheses, we find that audit fees are higher (lower) in countries with higher uncertainty avoidance, individualism, and masculinity (power distance) scores. Our further analyses reveal that earnings management proxied by abnormal accruals does not impact the relationship; however, country-level creditor rights influence audit fees in high power distance and masculine cultures. We also note that national culture influences auditor choice and audit opinion. Our main findings are robust to alternate proxies and subsample analysis, as well as to address potential endogeneity concerns. Overall, our findings offer important implications for firms operating in global markets and for the audit profession.

This study examines the effect of returnee directors, defined as local directors who have studied or worked in foreign countries, on a firm's green innovation. Utilising robust econometric modelling, we examine a large sample of A-share nonfinancial firms listed on the Shenzhen and Shanghai stock exchanges. Our findings reveal a positive and significant relationship between returnee directors and green innovation. Interestingly, this association remains consistent across both environmentally sensitive and non-sensitive industries. However, it becomes more pronounced when returnee directors are non-executive, function within state-owned enterprises, number more than one on the board, or operate in firms with poor internal and external corporate governance environments. Furthermore, we demonstrate that returnee directors, armed with foreign education or work experience, increase green innovation. The results withstand a series of robustness checks, including the Heckman two-step sample selection model and propensity score matching. Overall, the results suggest that returnee directors drive green innovation.

This study examines the effects of female CEOs on green innovation. Drawing on contingency theory, we also investigate the moderating effect of state ownership, regional development, firm size, and industry type on the relationship between female CEOs and green innovation. Using data on Chinese non-financial companies listed on the Shanghai and Shenzhen stock exchanges from 2008 to 2016 (amounting to 9997 firm-year observations), we find reliable evidence that female CEOs are greener than their male counterparts. We find that female CEOs working in state-owned firms and firms located in more developed regions are more likely to promote green innovation than those working in non-state-owned firms and firms located in less developed regions. We also find that the positive effect of female CEOs on green innovation is more pronounced among firms that are large and belong to environmentally sensitive industries.

This study examines the relationship between returnee directors and cost of debt. We use robust econometric modelling on large unique sample data of 15,832 firm-year observations from 2007 to 2018. We find a negative and significant association between returnee directors and the cost of debt, suggesting that these directors give firms access to cheaper debt capital. The negative relationship is more pronounced in private-owned firms and firms with more than one returnee director. In further analyses, we demonstrate that returnee directors' favourable influence on the cost of debt is through improvement in internal monitoring mechanisms evident in quality financial reporting. Our findings provide evidence of how returnee directors send positive signals to the debt market through effective monitoring and transmission of superior corporate governance practices to emerging markets.

This study examines the effect of chief financial officers (CFOs) gender on firms' financial statement comparability. Using a sample of Chinese listed firms, we find that firms with female CFOs exhibit higher comparability relative to firms with male CFOs. We further find that the positive relation between having a female CFO and comparability disappears in the industries that are dominated with male CFOs. In additional analyses, we fail to find any significant effects of having female chief executive officers (CEOs) or other female executives on comparability, highlighting the importance of CFOs in the domain of financial reporting decisions. Finally, we show that only in non-male CFO dominated industries, greater comparability is associated with an improvement in analysts' forecast accuracy and dispersion. Overall, our findings are consistent with the view that, due to their innate personality and behavioral differences, female CFOs are likely to exhibit stronger incentives to comply with accounting rules and standards, which in turn improves comparability. We also highlight the uniqueness of comparability by showing that it does not always co-move with reporting quality since it is an inter-firm attribute rather than a firm's own reporting characteristic.

This study aims to investigate whether government withdrawal affect corporate social responsibility (CSR) performance, and how CEO’s political connection moderates its relationship. We use sample data from Chinese listed firms over the 2010 to 2015 period to test our hypotheses. We find that decrease in state ownership through government withdrawal tends to negatively affect firms’ CSR performance, but the CEO’s political connection weakens its negative relationship and increases the firm’s likelihood towards CSR activities. Our findings imply that firm’s social engagement mainly result from high governmental involvement, and usually from political connections, because such firms are subject to close scrutiny by stakeholders and thus are more likely to improve social performance. Moreover, this research provides important implications to policy makers regarding the social outcomes of government withdrawal and the usefulness of firms’ political connection in developing economies like China. Este estudio tiene como objetivo investigar si la retirada del gobierno afecta al rendimiento de la responsabilidad social corporativa (RSC), y cómo la conexión política del CEO modera su relación. Utilizamos los datos de una muestra de empresas chinas que cotizan en bolsa durante el período 2010-2015 para comprobar nuestras hipótesis. Encontramos que la disminución de la propiedad estatal a través de la retirada del gobierno tiende a afectar negativamente a los resultados de RSC de las empresas, pero la conexión política del CEO debilita su relación negativa y aumenta la probabilidad de la empresa hacia las actividades de RSC. Nuestras conclusiones implican que el compromiso social de las empresas se debe principalmente a la alta participación gubernamental, y normalmente a las conexiones políticas, porque estas empresas están sometidas a un estrecho escrutinio por parte de las partes interesadas y, por lo tanto, es más probable que mejoren sus resultados sociales. Además, esta investigación ofrece importantes implicaciones para los responsables políticos en relación con los resultados sociales de la retirada del gobierno y la utilidad de la conexión política de las empresas en economías en desarrollo como China.