Category Archives: RESEARCH ARTICLE

Volatility spillovers of cloud stocks: Evidence from China using the dynamic connectedness approach

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Abstract

Based on daily data from 2013 to 2022, this study examines the spillover effects of volatility between cloud stocks and other asset classes (global stocks, treasury bonds, gold and crude oil) using the VAR connectedness approach. The results show that there is a significant spillover effect from global stocks and crude oil markets to the cloud stock market. The spillover effects become stronger whenever there are shocks such as economic crisis, turbulence in the international financial markets, COVID-19 and global inflation. However, nearly 91% of the variations of cloud stocks come from within, suggesting that the diversification/hedging value of cloud stocks is potentially high.

Confucian culture and cost stickiness

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Abstract

Cultural features may exert significant impact on firm behaviour. Through a sample of listed A-share firms on the Shanghai and Shenzhen Stock Exchanges, we find that Confucian culture may significantly lower firms' cost stickiness. Our mechanism tests suggest that ideologies of self-discipline and prudence embedded in Confucian culture may mitigate agency issues as well as overestimation of firm earnings. Furthermore, such impact is more pronounced among firms of lower shareholding by institutional investors or of weak internal control, which suggests that Confucian culture may help rectify the imperfection of corporate governance. Lower cost stickiness may also reduce firm risk.

An evaluation of the animal welfare accountability being demonstrated by global apparel companies

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Abstract

This study evaluates apparel companies' accountability through assessing the quality of their disclosures pertaining to animal welfare. Content analysis is undertaken of annual reports, social responsibility reports, dedicated social responsibility webpages and apparel hangtags and labels collected from the world's largest public apparel companies. Results show that the quality of apparel companies' animal welfare disclosure generally falls short of what is expected by surrogate representatives/stakeholders of animals.

When it’s not personal but positional: The upside of CEO power

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Abstract

We examine links between corporate cash holdings and types of CEO power, and how these affect firm performance, using agency and stewardship theories to distinguish two types of CEO power: one attributable to the CEO position, and one attributable to CEO personal characteristics. Measured as indices, we find positive associations with cash holdings for both types of power, individually and in combination, but only positional power with higher cash holdings is positively associated with firm performance. Our findings are shown to be robust and suggest that scrutiny of cash holdings by CEOs with high personal power may be prudent.

Do hometown CEOs treat their employees better? Evidence from China

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Abstract

Employees are the most fundamental stakeholders in business operations, and safeguarding their rights and interests is an important manifestation of a firm's level of social responsibility. Little research has addressed whether hometown CEOs can affect employee-related CSR (E-CSR) and how the corporate ownership and regional economic development would moderate such an impact. Using an informal institutional perspective, we extend the literature on CEO characteristics by exploring the factors leading to employee welfare. Analysing a panel dataset of 1018 firms from Chinese A-share listed companies between 2008 and 2020, we find a positive relationship between hometown identity and E-CSR. Further research indicates that the effect is more pronounced in state-owned enterprises and underdeveloped areas. Against the backdrop of weak labour protection in China's labour market, we contribute to research on informal institutions and employee benefits in pursuing harmonious labour relations.

Investment centre manager’s multiperiod fairness perceptions and intertemporal dependency

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Abstract

This paper explores the motivation of investment centre managers when their investment centre's performance is affected by decisions made by their predecessor. Through a qualitative case study of a Japanese manufacturer, the effectiveness of conventional remedies for motivational issues and further motivational issues caused by the same remedies, as identified in the extant literature, are examined. The field data underscore managers' multiperiod as opposed to period-by-period fairness perceptions as key to preventing the further motivational issues. This paper also demonstrates the potential usefulness of the vignette technique as a data collection method in qualitative accounting research.

Friendly boards and capital allocation efficiency

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Abstract

This study examines the effect of friendly boards on capital allocation efficiency. We provide evidence that firms with friendly boards have a positive and statistically significant effect on capital allocation inefficiency. We find our results robust to different measures of friendly boards and capital allocation inefficiency, alternative model specifications, omitted variable bias, self-selection bias and other endogeneity concerns. We also show that the positive association between friendly boards and capital allocation inefficiency is lower in firms with high external corporate governance quality but higher in firms with high financial constraints. The findings imply that poor board monitoring and high agency conflicts in firms with friendly boards lead to high capital allocation inefficiency.

Earnings management in the post‐IPO years and their impact on the long‐run stock performance of foreign versus domestic IPO firms

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Abstract

Using a matched sample of foreign and domestic IPO firm listings on US stock exchanges, we find that foreign IPO firms are associated with significantly higher upward earnings management via discretionary (abnormal) long-term accruals in the first 2 years post-IPO year, and lower long-run stock returns in the 3 years post-listing, compared to US domestic IPO firms. Our results also show that the lower long-run stock returns of foreign IPO firms are associated with their higher discretionary long-term accruals. We provide further evidence that institutional investors can mitigate lower long-run stock returns of foreign IPO firms compared with US domestic IPO firms.

The spillover effects of managers’ evasiveness: Evidence from earnings communication conferences

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Abstract

We investigate how managers' evasiveness affects peer firms' stock returns. Managers' evasiveness is measured by the degree of managers' irrelevant answers and non-answers during earnings communication conferences. Our results show that peer firms' investors react negatively to managers' evasiveness. Moreover, we find that the spillover effects are stronger for peer firms with lower information transparency, and the leading firms with a higher market power or a higher leverage ratio.

Actions speak louder than words: Can credible green commitment facilitate bank loan financing? Evidence from China

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Abstract

Our study investigates whether credible commitment to corporate green behaviours influences corporate finance. Specifically, using the unique setting Green Manufacturing (GM) program in China, we examine whether and how green manufacturing certification (GMC) endorsed by the government could lead to an increase in firms' bank loan financing. We find that GMC increases bank loan financing, mainly through alleviation of banks' concerns of information risk and default risk potentially arising from environmental risk. Heterogeneity analyses show that the positive effect of GMC on bank loan financing is more pronounced for non-state-owned enterprises, firms in polluting industries, in less eco-friendly regions, and in Green Finance Pilot Program regions. Our findings suggest that the government plays an important role in discerning and endorsing corporate green behaviours, and thus directing banks' financial resource allocation decisions.