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From red tape to innovation: How does municipal government financing reform affect corporate R&D activities?
Abstract
We evaluated the effect of an exogenous shock on municipal government debt financing reform on corporate innovation for a sample of Chinese-listed firms from 2009 to 2019. The results show that this reform stimulates corporate innovation capacity, and the effect is more pronounced in non-state-owned and financially constrained firms. We attribute these findings to reduced external financing costs and the crowding-out effect of a firm's real estate investment. Our results are robust to alternative variable definitions, model specifications, and estimation techniques and provide novel evidence concerning the role of municipal government financing in corporate innovation.
CEO compensation convexity and meeting‐or‐just‐beat earnings forecast
Abstract
A line of research documents that corporate executives' compensation convexity relates to earnings management, the issuance of management earnings forecasts and firms' investing and financing decisions. Another stream of research demonstrates that executives manage earnings expectations downward to beatable levels. We bridge these lines of research by investigating how CEO compensation convexity affects expectation management, an important earnings reporting strategy. We hypothesise and find that compensation convexity plays an important role in inducing CEOs to adopt a meet-or-just-beat earnings reporting strategy, which is implemented by downward expectation management.
How does a parent’s knowledge influence the knowledge bridging of joint ventures?
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Climate risk exposure and debt concentration: Evidence from Chinese listed companies
Abstract
We examine the impact of firm-level climate risk exposure (CRE) on the debt concentration choices of Chinese listed companies over the period 2010–2021. Our findings suggest that CRE prompts firms to choose debt structures with higher concentration, and this relationship holds true for both physical and transition risks. Further analysis reveals that this effect is more pronounced among firms with higher default risk, restricted access to capital, and lower accounting quality. Our findings remain solid to a battery of robustness tests. Collectively, our study sheds light on the economic consequences of through the lens of firms' debt concentration adjustments.
Carbon emissions and abnormal cash holdings
Abstract
We find that companies that emit high levels of carbon tend to have lower abnormal cash holdings. We have run a battery of endogeneity tests to ensure the robustness of our findings. Our further analysis revealed that weaker internal governance, higher information asymmetry and CEO overconfidence contribute to the heterogeneity of the results. Additionally, we notice that polluting firms prefer to spend more on capital investments while allocating less toward dividends and R&D activities. Our results are consistent with agency theory, indicating that managerial preference for suboptimal investment and/or avoidance of external disciplining might contribute to lower abnormal cash holdings.
Smart contracts, the legal profession and COVID‐19: Highlighting the need to embrace technology
Abstract
It has been claimed that technology would replace the legal profession with artificial intelligence and codification of documents replacing the twenty-first century lawyer. With this premise in mind, this paper discusses smart legal contract formation in the context of Australian contract law, the perceived replacement of lawyers through blockchain technology and how the COVID-19 pandemic has set the trajectory for smart legal contract convention. We consider whether the legal profession can ever truly be replaced by technological advances and whether COVID-19 has pivoted the way the legal profession performs business transactions towards modernisation. Although prior literature has considered how the legal profession may benefit from increased technology use, the expected timeframe for occurrence was dependant on a strong reluctance by the profession to change the status quo. Analysis of the impact of COVID-19 on the legal profession including the execution of legal documents, provides insight into areas for improvement going forward and whether a regulatory overhaul is required. This research shows that, although there are a number of advantages to the implementation of smart legal contracts using blockchain technology, there still remains numerous implementation and regulatory concerns that need resolution if smart legal contracts are to be widely used.
The capital market consequences of stock market liberalisation: Evidence from Mainland‐Hong Kong Stock Connect Programs in China
Abstract
We analyse the capital market consequences of stock market liberalisation in a quasi-natural experiment setting, where Mainland-Hong Kong Stock Connect Programs allow foreign investors to trade in the Chinese stock market. Utilising difference-in-differences estimations, we observe improved stock liquidity, driven by direct liquidity provision and indirect signals to domestic investors. Particularly notable are the effects on eligible stocks without previous exposure to foreign investors, characterised by high corporate transparency and investor protection. The resulting liquidity enhancements reduce equity costs, ultimately elevating firm value. In short, our study highlights the positive influence of stock market liberalisation on the capital market.
Statement of Retraction: Interpretive model of enablers of Data-Driven Sustainable Quality Management practice in manufacturing industries: ISM approach
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Institutional attention and investment efficiency
Abstract
This study investigates how institutional investors' attention on the earnings announcement day affects corporate investment decisions. I find that the investment of firms receiving abnormal institutional attention is approximately 1.8 times more sensitive to their stock price than that of others. This effect is more pronounced when institutional investors have greater incentives to produce information and when corporate managers have greater incentives and capability to employ the incremental information contained in the stock price. These findings suggest that attention encourages institutional investors to incorporate private information into stock prices, which provides a useful guide for managers' investment decisions.