This paper examines the impact of allocation of decision rights (i.e., decision structure) on tax efficiency, reflected by the speed at which firms adjust toward their target levels of tax avoidance. Relying on a Chinese setting, we find that listed business groups with a centralized decision structure exhibit faster tax adjustment speed, relative to those with a decentralized structure. This baseline finding is robust to a series of sensitivity checks. Cross-sectional analyses indicate that our main findings are conditional on external environment uncertainty, internal information quality, demand for coordination, tax enforcement, managers’ tax expertise, and board busyness. We also show that centralization is associated with higher tax efficiency scores. Overall, our research highlights the importance of decision structure for achieving tax efficiency and thus provides value-relevant implications for stakeholders.

Insurance companies' investment in equities has attracted considerable scholarly attention in recent years. Insurance funds focus on the future performance of enterprises, while innovation is the driving force behind the enterprises long-term development. However, there is little evidence in the existing literature on whether insurance funds' shareholding can affect firm innovation. Using the data on China's listed companies over the period of 2007-2018, this article empirically examines the correlation between insurance funds' shareholding and firm innovation. Results show that companies with insurance funds' shareholding have more research and development investment and patent output compared to those without. The more shares insurance funds hold, the more companies invest in innovation, although in the short term. Further analyses show that firms are less innovative after insurance funds cancel shares. In addition, the positive association between insurance funds' shareholding and firm innovation is more pronounced for firms with a lower management shareholding ratio, which means that insurance funds' shareholding can reduce managerial myopia. Mechanism tests show that: first, insurance funds' shareholding promotes firm innovation by reducing corporate financialisation; second, insurance funds' shareholding promotes firm innovation by alleviating financing constraints; and finally, the competing explanation that improving internal control can serve as a mechanism through which insurance funds' shareholding affects firm innovation fails the test. This article contributes to a better understanding of how insurance funds' shareholding influences corporate innovation.

This study investigates whether venture capitalists' (VC) monitoring role has spillover effect, using the evidence of their portfolio firms' adoption of valuation adjustment mechanism (VAM) in mergers and acquisitions (M&As). Based upon firm-level data in the Chinese secondary market, we find that VC-backed firms prefer using VAM and get higher strategic returns. Findings confirm the spillover effect. We further identify VCs as monitors through working in the portfolio firms' decision-making positions and actively involving in negotiating VAM terms. Meanwhile, VCs act as a substitute for other large shareholders in monitoring the portfolio firms' M & As; and domestic VCs perform better.

This study investigates the role of venture capitalists (VCs) in initial public offerings (IPOs) in the Chinese Sci-Tech Innovation Board, where VCs are highly concentrated. We find that VC-backed firms are likelier to succeed in IPOs; however, they exhibit greater IPO underpricing and perform poorly post-IPO. Findings support the grandstanding model. We identify that VC-backed firms do not receive fewer IPO inquiries, and the young-VC group has greater effects on IPO underpricing and post-IPO performance. Further, we explore the well-known A-share Main Board situation but obtain different results.

We explore the impact of management team ability on firm-level accounting comparability. Through using a sample of Chinese listed firms from 2009 to 2022, the paper documents that accounting comparability has an inverse U-shaped association with management team ability where a certain level of managerial ability leads to the highest levels of accounting comparability. Further analysis shows that high-ability managers have different incentives on accounting comparability when compared to low-ability managers, especially when they suffer financing constraints, possess more proprietary information, experience weak market environment, bear excessive price risk and risk premium and work in the politically connected firms.

Through using 17,995 firm-year observations of all the Chinese A-share listed firms from 2008 to 2016 as a sample, we document that firms with vertical interlock have a lower likelihood of committing corporate fraud. We further test the underlying mechanisms, and we find that the effect of vertical interlock on the occurrence of corporate fraud is more pronounced when firms operate in a region with poor legal protection; with the legal environment being enhanced in China, the effect of vertical interlock has become less significant; and the effect of vertical interlock is also more pronounced when firms exhibit poor information environment at the firm level. Our results in this paper imply that the role of large shareholders and legal protection are substitutes in an emerging economy, and even with rapid economic and legal development in China, large shareholders keep playing a positive role in controlling fraudulent behaviours in Chinese listed firms.

This paper relies on a quasi-experiment setting given by the differential ESG regulation in Chinese market to explore the attitude of different typed debtholders on corporate ESG reporting. We find enhanced ESG reporting triggered by the regulation is only informative to bondholders while adds no incremental information to banks. Further analysis reveals that bondholders pay close attention to environmental and governance dimensions but not social dimension. This study sheds light on the economic consequences of the recent hit ESG reporting and contributes to the literature on global finance and ESG regulation.

In China, the deviation of enterprises from the real economy to the financial sector has raised concerns. Using a sample of listed companies held by central state-owned enterprises from 2009 to 2018, we investigate the influence of government supervision on this deviation. We find that government supervision effectively reduces investments in financial assets by central state-owned enterprises. The impact is more significant in enterprises with internal control deficiencies, especially in those related to finance. Further study finds that the effect of government supervision conducted for the first time, second time, and third time shows a decreasing trend.

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Dividend payouts of Chinese firms are typically flexible and unstable, and firms have leeway to change dividends in response to a crisis. Using this setting, we document that Chinese listed firms tend to decrease dividend payouts under the coronavirus crisis, supporting our financial constraints hypothesis instead of the alternative dividend signaling hypothesis. The baseline result is robust to a series of sensitivity checks. Underlying mechanism tests show that the negative effect of COVID-19 on dividend policies is enhanced in high-constrained groups compared to that in low-constrained groups. Further analysis of crisis-related factors reveals that the main result is enhanced when firms engage in international diversification, when firms have greater labor intensity and when firms are nonstate-owned.

China modified the asset impairment standard in 2007, prohibiting long-lived asset impairment reversal, which it had previously allowed. Using this setting as a quasi-experiment, we investigate how the prohibition of long-lived asset impairment reversal affects corporate technological innovation. Our empirical results demonstrate that the prohibition of impairment reversal has negative impacts on corporate innovation outputs. Further analyses reveal that the negative effect of this prohibition on corporate innovation is more prominent in companies with high discretionary accruals, high shareholding ratios for the largest shareholders, and companies in highly competitive markets.

Borrowed from the relevant research on the impact of name uniqueness on one’s personality, our study extends the research perspective to its impact on external auditors. Using the data of Chinese listed firms in 2009–2019, we find a significantly positive relationship between CEOs’ name uniqueness and audit fees. Further study shows that this influence could be explained by its impact on CEOs' personality traits, resulting in strategic deviance or increased audit effort, rather than its impact on auditors' first impression. The impact of CEOs’ name uniqueness on audit fees is more pronounced when CEOs’ characteristics are more susceptible to their name uniqueness, when companies are more likely to attract auditors’ attention, or when auditors are more likely to be affected by their uniqueness. This paper extends the impact of CEOs’ personality traits on audit fees, and expands the understanding of CEOs and audit decision-making.

This paper examines a new type of corporate governance mechanism that has emerged in China, namely, dividend commitment, and documents its wealth transfer effects on bond yields. We find the larger-commitment group exhibits greater bond yields than the smaller-commitment group. Further analysis reveals that bondholders pay more attention to the wealth transfer effects when government bailouts are not available, when investing in exchange-traded bonds, and when other guarantees are not offered. This study sheds light on the effects of a unique governance mechanism in the Chinese bond market and contributes to the literature on global finance and corporate governance.

本研究以2009—2017年我国A股上市公司为样本,实证检验股价崩盘风险是否会对上市公司未来线上投资者关系管理产生影响.研究结果表明,当上市公司股价崩盘风险较高时,其后续在线上与投资者沟通互动的效率更高,说明公司通过加强线上投资者关系管理建立事后补救机制以进行危机公关.进一步分析表明,公司信息透明度和高管是否拥有金融会计类工作背景对上述关系具有调节作用,即当上市公司信息透明度较低和拥有较多金融会计类工作背景的高管时,股价崩盘风险对线上投资者关系管理的正向影响更显著,尤其体现在对线上投资者问答回复率的正向影响.本研究反映了测算股价崩盘风险在公司治理角度的信号作用与预测意义,并揭示了信息时代投资者关系管理来自资本市场的决定因素,具有重要的理论和现实意义.

This study tests the effect of multiple large shareholders on the level of corporate fraud using the data of Chinese listed companies from 2010 to 2018. We find lower probabilities and lower corporate fraud frequencies when there are multiple large shareholders in Chinese listed companies, indicating that their presence plays a supervisory role in internal governance. These results persist after we control for endogeneity. Moreover, the effect of multiple large shareholders on corporate fraud is strengthened with the separation of control right and cash flow right. Further analyses reveal that companies with multiple large shareholders experience considerably reduced information disclosure fraud but no reduction in operating or leader frauds. Additionally, information asymmetry and the capital occupation of controlling shareholders both play a mediating role in the relationship between multiple large shareholders and the level of corporate fraud. This study enriches the literature on the determinants of corporate fraud and the effects of multiple large shareholders. Our findings also provide implications for companies and regulators regarding ways to reduce fraud.

Top management in state-owned enterprises (SOEs) works in a typical internal labor market and seeks political promotion after the tenure. By using a sample of Chinese listed SOEs for 2003-2013, this paper documents that top management in SOEs has motivations to trade-off its own promotion through increasing dividend payout, and the evidence becomes more significant when SOEs report better financial performance than their industry averages.

Dividend policies can predict changes in capital structure. We focus on a unique setting, namely, dividend commitment emerging from a new dividend policy in China, and explore its relation to leverage. We find a commitment to increase dividends is associated with a subsequent reduction in leverage, and this negative relation is enhanced in firms without preliminary conditions specified for their commitments or with greater dividend smoothing in previous periods. Robustness tests support the main findings. Further analysis addresses four internal mechanisms that play essential roles in the above link, and we provide further details about how leverage is reduced.

Limited attention is an inevitable outcome of voluminous information. Investors facing a large number of stocks can only focus on a few and endeavor to have access to in-depth knowledge. Since the retrieved knowledge would affect investors’ decisions, investor attention becomes a factor in affecting stock returns and trading volumes. Through using 890,840 firm-week observations of Chinese listed firms between 2011 and 2018 as a sample, we document that investor attention, measured by abnormal Baidu search volume index (ASVI), is positively associated with contemporaneous stock returns but with a complete reversal in the subsequent period; and ASVI exhibits a positive link with trading volumes without a subsequent reversal, but its predictable ability becomes weaker in subsequent weeks. The effect of ASVI is pronounced for the ChiNext market and firms with higher level of financial transparency. We further find investor attention has been driven by five corporate events including earnings announcements, management forecasts, financial analysts following, mergers and acquisitions and dividend payout. This paper contributes to the theory of limited attention through using a direct measure of attention, providing evidence on its economic consequences in the Chinese stock market and exploring specific events that drive investor attention.

Share repurchase becomes prevalent in the recent years in China, and China gradually changes its regulatory attitude from restriction to encouragement on it. In this paper, we present that the new round of Company Law revision in China reduces the signalling role of share repurchases; however, when the firms deliver good signals on dividends payout, the negative link between regulatory changes and market reaction to share repurchases becomes weaker. The paper sheds lights on the most up-to-date regulatory change in terms of share repurchases in China and its effect on market reaction to share repurchases.