The above article, published online on 30 January 2024 in Wiley Online Library (https://onlinelibrary.wiley.com/doi/10.1111/jifm.12198) has been retracted by agreement between the journal's Editors in Chief, Sabri Boubaker and Xiaoqian Zhu, and John Wiley & Sons Ltd.
The retraction has been agreed due to an editorial office error that led to the publication of the article without peer review.
This study examines the impact of blockholder exit threats on excess cash holdings following China's split-share structural reform. Previous studies have confirmed the governance role of blockholder exit threats, but their effectiveness is limited to companies with greater private benefits. Using a sample of 2340 firm-year observations of Chinese listed firms between 2002 and 2009, we find that the exit threat of blockholders increases the level of excess cash holdings. These results suggest that blockholders view exit threats as a means of collaborating with controlling shareholders to boost excess cash holdings and diversify corporate resources for private benefits. The collusion effect is more pronounced in firms with poorer investor protections, lower shareholding concentrations, and more severe agency conflicts. Additionally, in terms of economic consequences, blockholder exit threats decrease buy-and-hold abnormal returns and increase the occurrence of corporate scandals. Overall, this study provides empirical evidence of collusion among large shareholders, which harms small shareholders' interests from the perspective of excess cash holdings.
The paper examines how central bank communication affects the macro information in analyst forecasts. Using quarterly data of Chinese-listed firms from 2007 to 2018, we find that richer and more frequent central bank communication increases the macro information contained in analyst forecasts. This effect is realized through the employment of in-house economists by security firms. In addition, we document that the effect of central bank communication on macroeconomic information in analyst forecasts is more salient under a contractionary monetary policy regime, during a bear market, or when the economic policy is more uncertain. We also show that analyst forecasts are more sensitive to central bank communication when firms that they follow are state-owned enterprises, have larger leverage ratios, or are located in more developed regions. In addition, analyst forecasts are more susceptible to central bank communication when the communication is in an informal oral format, when the public has more trust in the credibility of the central bank communication, and when the central bank pays more attention to expectation management after 2010. Finally, we show that richer and more frequent central bank communication also improves the accuracy of analyst forecasts.
In recent decades, environmental, social, and governance (ESG) factors have received increasing attention in the literature of corporate internationalization. While prior studies have extensively examined how ESG initiatives implemented in the host country enhance corporate international performance, less attention has been paid to the facilitating role of previously accumulated ESG performance in the internationalization process. Drawing on a sample of 2083 unique publicly listed Chinese firms from 2010 to 2019, we explore whether and how ESG performance promotes corporate outward foreign direct investment (OFDI). Our findings indicate a positive association between corporate ESG performance and both the propensity and scale of OFDI. We also identify financial constraints and corporate reputation as two mechanisms through which ESG performance influences OFDI. Our additional analysis suggests that the reputation-strengthening mechanism of ESG performance is more pronounced for family firms, whereas no significant difference is observed between family and nonfamily firms in terms of the financial mechanism. These findings have important implications for managers and policymakers seeking to promote sustainable development and internationalization.
Sustainability has become more than just an aspiration in business. It has become an integral part of business strategy and decision-making. Organizations have realized that adhering to sustainability with its impact on multi-facets can drive business success. Long-term growth requires an understanding of the relationships between people and their surroundings. Engagement of stakeholders is essential for planning, designing, implementing, and ensuring the efficacy of programmes. Due to the requirement for sustainability and the engagement of a greater stakeholder range in project planning, the project plan complexity is growing. The lack of or insufficient engagement of stakeholders throughout the project life cycle, particularly in the early phases of implementation and planning, frequently has a detrimental effect on the intended project performance. Effective stakeholder engagement is essential to counterbalance the combined effects of a lack of contextual knowledge by stakeholders and a lack of support in the field. However, this integration encounters difficulties such as resource restrictions and competing stakeholder interests. To encourage stakeholder engagement with the initiatives, project resources may be allocated based on the relative importance of competing areas. This study intends to establish a Stakeholder Engagement Framework (SEF) to increase the effectiveness of stakeholder engagement in projects by systematically evaluating potential conflicts and integrating the perspectives of stakeholders and the project management team. To do this, we use fuzzy logic inputs to account for ambiguities throughout the project life cycle, as well as stakeholder theory, value-based management, matrix-based dependency modeling, and total quality management to provide a framework for stakeholder participation. Then we implement the suggested SEF methodology to organize stakeholder participation for a green building project. The suggested framework will promote stakeholder participation under long-term goals for project managers by identifying potential conflicts of interest.
This study examines whether the pre-deal target-bidder firm governance gap affects the bidder's postdeal change in governance quality. We estimate cross-sectional regressions using mergers and acquisitions from 2004 to 2016. We find that the bidder's firm-level governance improves for acquisitions where the target's governance quality is better than that of the bidder preacquisition. We attribute the results to reverse portability, suggesting that the predeal governance gap creates space for governance transfer, and bidders can adopt better governance of targets after the acquisition. Board independence, audit committee independence, CEO-Chairman separation, stock compensation, and equal treatment of minority shareholders serve as potential channels to demonstrate the bidder's higher governance after the acquisition. Our findings also reveal that bidders with governance improvement are also associated with higher operating performance. We extend the portability theory of Ellis et al. (2017) and suggest that governance can also travel from targets to bidders through mergers and acquisitions.
We investigate how tax avoidance affects the maturity structure of debt in firms where tax avoidance costs are presumably low, namely SMEs. Previous research has shown that creditors of listed tax-avoiding companies impose shorter maturities to more frequently reassess the tax avoidance risks in debt contracts. Using a sample of 110,690 firm-year observations of Spanish SMEs over the period 2007–2020, we examine the relationship between tax avoidance and debt maturity and the channels driving this relationship. We find that tax-avoiding SMEs show a longer debt maturity. This effect is stronger for SMEs with higher profitability, lower earnings management incentives, and higher reliability of financial reporting. We also find that tax avoidance reduces leverage and short-term debt, increases future cash flows, and decreases future cash flow volatility. Overall, these findings suggest that, unlike large firms, SMEs use cash tax savings to reduce leverage and short-term debt in their financial structure and that tax avoidance is positively valued by their lenders.
This study examines the extent to which firms in emerging markets build supply chains around social relationships. Most existing studies contend that companies decide who to buy (sell) products from (to) based on cost–benefit trade considerations of product quality, price, and other factors. We argue that companies make supply chain decisions around social relations to reduce possible risks. We empirically test this conjecture by using data from Chinese municipal party secretaries who served in different places from 2006 to 2017, and the primary customers of listed companies. The results show that after an official move from one jurisdiction to work in another, the firms in the latter jurisdiction will see an increase in customers from where the official previously served. Further investigation reveals that companies that are economically strong, face fierce competition, are state-owned, and are located in areas with low degrees of marketization are more likely to attract customers from the area where the official last served after the new municipal party secretary takes office. Making supply chain decisions based on the social relationships of the secretaries of the municipal party committees does not improve companies' profitability, but doing so will increase the turnover rate of accounts receivable and accounts received in advance.
We review the recent literature on the assurance of Extended External Reporting published since the review published in 2021 in the Journal of International Financial Management & Accounting. Our review includes 50 articles published between 2020 and August 2023 across 30 journals ranked A*, A, or B on the Australian Business Deans Council 2022 Journal Quality List. We find that the literature continues to be dominated by positivist studies investigating the determinants and consequences of assurance. Studies on determinants examine carbon assurance, ownership, governance, and institutional themes. The consequences studies included in our review examine reporting-related outcomes and investors' decisions. Other (qualitative) studies we reviewed examine issues such as assurance providers seeking meaning in their work and their attempts to promote assurance beyond merely a verification tool. We highlight several avenues for future research that could inform the work of standard setters and regulators.
Corporate resolution on environmental, social, and governance (ESG) communication informs firms' environmental commitment, a growing determinant of corporate risk profile perceived by the market. This study examines ESG reporting in the presence of board co-option, a phenomenon that paralyzes the dependency of the board of directors and impairs corporate transparency. Using data from 643 US-listed firms from 2007 to 2018, we investigate the relationship between board co-option and ESG disclosure practices and show that firms with a higher proportion of co-opted directors on board disclose less ESG information, though this relationship diminishes if firms are strong ESG reporters. Further analyses reveal that long-tenure board chairs, high attendance rates at board and audit committee meetings, and independent chairs of audit committees mitigate this adverse effect. In addition, we document an increasing inverse relationship among firms located in more corrupt and Democratic-leaning states and operating in heavy-emitting industries. Our results support the premise that co-opted directors insulate CEOs from ESG reporting pressure and highlight that corporate governance, environmental performance as well as state institutions play significant moderating roles in this relationship.